FILE PHOTO: Bull and bear symbols for successful and bad trading are seen in front of the German stock exchange (Deutsche Boerse) in Frankfurt, Germany, February 12, 2019.
Kai Pfaffenbach | Reuters
European shares are expected to open mostly flat on Tuesday as global investors await the U.S. Federal Reserve’s monetary policy update.
Futures tied to the pan-European Stoxx 50 were last seen trading flat, while those tied to the FTSE 100, DAX and CAC 40 indexes were also little changed.
The Fed is widely expected to cut its key interest rate at its final meeting of the year. Money markets are currently pricing in an 87% chance of a quarter-point cut when the central bank wraps up its two-day meeting on Dec. 10, according to the CME’s FedWatch tool.
The move will set the scene for central banks in Europe, with the Swiss National Bank set to deliver its own policy update on Thursday. The Bank of England and European Central Bank follow on Dec. 18, with Norway’s Norges Bank and Sweden’s Riksbank also scheduled to announce interest rate decisions on the same date.
In corporate news, the European Union announced Tuesday that it had struck a deal to “simplify” corporate sustainability laws. Under the updated system, most companies in the EU will be exempt from complying with sustainability reporting.
“Today we delivered on our promise to remove burdens and rules and boost EU’s competitiveness,” Marie Bjerre, minister for European affairs of Denmark, said in a statement. “This is an important step towards our common goal to create a more favourable business environment to help our companies grow and innovate.”
Investors are also digesting comments from U.S. President Donald Trump, who said on Monday that the U.S. will allow Nvidia to ship its H200 AI chips to “approved customers” in China — if America gets a 25% cut of the proceeds.
Elsewhere, Deutsche Bank downgraded autos giant Volvo from a Buy rating to a Hold on Tuesday, lowering its target price for the company by 1.8%. It also reduced its target price for Daimler Truck by 4.7%.
“The U.S. market’s significant contraction this year has once again tested truck manufacturers’ resilience,” the investment bank’s strategists said in a note. “Given the divergent market forecasts for the forthcoming year, we anticipate the U.S. will continue to be a critical competitive battleground.”
On Monday, the Magnum Ice Cream company debuted on the Amsterdam stock exchange, completing its spin-off from consumer goods giant Unilever. The stock rose slightly during the session.
Tuesday will see data releases on German exports, Dutch inflation, and British retail sales.
Overnight in Asia, stocks were broadly lower, while U.S. stock futures were last seen trading flat.