European stocks close lower as traders focus on earnings and bond yields

Canada’s central bank on Wednesday took a big step in easing monetary policy by cutting its key benchmark rate by 50 basis points to 3.75%.

The Bank of Canada said it expects the global economy to expand at a rate of about 3% over the next two years, noting that U.S. growth is set to be stronger than previously forecast. The inflation rate in Canada came in at 1.6% in September, down from an inflation print of 2% in August.

“We took a bigger step today because inflation is now back to the 2% target and we want to keep it close to the target,” Bank of Canada Governor Tiff Macklem said in comments reported by Reuters.

The central bank said it forecasts gross domestic product growth of 1.2% this year, 2.1% in 2025, and 2.3% in 2026.

— April Roach

Policymakers at the European Central Bank are divided on the need for a jumbo-sized half-point interest rate cut in December, amid growing concerns about downside risks to inflation and economic growth.

Portuguese central bank chief Mario Centeno and Dutch ECB Governing Council member Klaas Knot both told CNBC on Wednesday that a half-point rate cut could be on the table at the ECB’s December meeting.

Austrian central bank chief Robert Holzmann, however, said the current economic picture does not support such a move.

The comments come shortly after the ECB delivered back-to-back interest rate cuts for the first time in 13 years at its October meeting.

Read the full story here.

— Sam Meredith

Spain’s Finance Minister Carlos Cuerpo sat down with Karen Tso at the IMF meeting in Washington on Wednesday to discuss his country’s economy.

“The external sector including exports in services has been one of the main drivers of growth and will be going forward,” Cuerpo told CNBC.

– April Roach

L’Oreal shares fell Wednesday after the firm flagged an increasing challenging ecosystem in China was impacting its sales.

“In China, where L’Oreal Paris is the number one mass brand, its division continued to suffer from low consumer demand,” the French beauty group said in a Tuesday statement released after the market close.

Overall sales grew 6% on a like-for-like basis in the third quarter and growth was observed in all regions except for North Asia, L’Oreal said. Shares of the cosmetics company were last trading 3.9% lower.

“The situation in the Chinese ecosystem has become even more challenging, but we believe in the future of this market and hope that the governmental stimulus will help improve consumer confidence,” said CEO Nicolas Hieronimus.

Luxury firms rallied in September after China launched a large-scale stimulus package in a bid to boost growth and restore confidence in the world’s second-largest economy. Deutsche Bank analysts said in a note Wednesday that, while the market may want to buy China stimulus beneficiaries, they still see risks as to the downside for L’Oreal.

The analysts also flagged weakness in North Asia and said they continue to expect that L’Oreal’s structural growth will be lower.

– April Roach

Swedish leisure firm Thule Group rose to the top of the European benchmark on Wednesday morning.

Shares of Thule Group jumped 12% after the company reported organic sales growth for the third quarter of 4.4%. Sales increased 1.4% to 2,344 million Swedish kroner ($221.5 million).

Meanwhile, Deutsche Bank shares continued their decline after a German court ruled against the company in a long-standing legal dispute with shareholders who alleged the lender underpaid in its acquisition of German retail bank Postbank.

Shares of the German bank were last 3% lower.

— April Roach

Heineken shares rose Wednesday after the Dutch brewer reported a rise in organic net revenue and reiterated its outlook for the year.

Shares were 2% higher as of 9:56 a.m. London time.

Beer volumes were up 0.7% in the quarter and net revenue rose 3.3% on an organic basis, the firm said in a trading update. It added that it continues to expect an increase in adjusted operating profit in the range of 4% to 8% on an organic basis for the full year.

“Our business continues to deliver in line with our plan in aggregate, despite some markets navigating challenging consumer and industry trends,” CEO Dolf van den Brink said in the Wednesday statement.

— April Roach

Sweden’s Volvo Cars cut its guidance for retail sales this year, even as third-quarter profit picked up on an annual basis.

The automaker, majority-owned by China’s Geely, said on Wednesday it now anticipates full-year sales growth of 7-8% this year, lower than its previous outlook of 12-15%, “given the accelerating weakness in the market and our focus on safeguarding value over volume.”

The company’s operating income hit 5.8 billion Swedish krona ($549 million) in the third quarter, up 30% year on year. Revenue was up by an annual 1% to 92.8 billion Swedish krona.

“Our industry is facing an increasingly volatile environment. Macroeconomic headwinds are intensifying, as is geopolitical complexity,” Volvo Cars CEO James Rowan said in a statement, noting that “continued cost actions remain necessary going forward, and we are determined to deliver on our ambitions.”

— Ruxandra Iordache

Swedbank reported a rise in third-quarter net profit on Wednesday to 9.4 billion Swedish krona ($890 million), up 9% from the previous quarter.

Income increased partly due to one-off effects, the bank said in its earnings report, while costs decreased seasonally and “as a consequence of the temporary hiring freeze and strict cost control.” The cost to income ratio, a measure of banks’ profitability comparing operating costs to income, fell to 0.31.

“It’s a strong result further strengthened by both one-offs and timing effects and that means we can deliver return on equity of 18.4%,” CEO Jens Henriksson told CNBC Wednesday.

— Holly Ellyatt

Dulux paints maker AkzoNobel reported a 3% drop in its third-quarter revenue on Wednesday, below expectations, hit by weaker demand in China and adverse currency effects.

The Dutch maker of paints and coatings said its quarterly revenue fell to 2.67 billion euros ($2.88 billion) from 2.74 billion a year earlier. That fell short of the 2.76 billion euros expected by analysts in a company-provided consensus.

The Amsterdam-listed company also said it expected its adjusted core earnings (EBITDA) to reach 1.5 billion euros this year, confirming its earlier forecast for it to be at the low end of a 1.5 billion to 1.65 billion euro range.

— Reuters

Deutsche Bank on Wednesday beat expectation in its return to profit in the three months to September, after snapping its 15-quarter profit streak in the second quarter.  

Crude oil futures have gained about 4% this week, after China cut its benchmark lending rates and geopolitical tensions in the Middle East remain volatile.

U.S. crude oil gained $1.53 to settle at $72.09 per barrel Tuesday afternoon, while global benchmark Brent added $1.75 to close at $76.04 per barrel. The rally extended Monday’s gains of more than 1%.

Though prices are rising this week, the supply-and-demand outlook looks bearish, even as Israel is still expected to retaliate against Iran for the Islamic Republic’s Oct. 1 ballistic missile attack.

U.S. crude oil sold off more than 8% last week as traders view an oil disruption in the Middle East due to Iran-Israel tensions as increasingly unlikely. A weak demand picture also weighed on prices, with consumption in China softening as more OPEC supply is expected to come online in December.

— Spencer Kimball

The International Monetary Fund lowered its global headline inflation projection 3.5% on an annual basis by the end of 2025, from an average 5.8% in 2024.

“The global battle against inflation is almost won,” the agency said in its World Economic Outlook released Tuesday.

However, “Despite the good news on inflation, downside risks are increasing and now dominate the outlook,” said IMF chief economist Pierre-Olivier Gourinchas. Now that inflation is headed in the right direction, global policymakers face a new challenge stemming from the rate of growth in the world economy, the IMF warned.

The fund kept its global growth estimate at 3.2% for 2024 and 2025, which it called “stable yet underwhelming.”

The full story can be found here.

— Hakyung Kim

Macroeconomic uncertainties, mounting geopolitical tensions and a desire to hedge against inflation have given gold — the classic “safe haven” asset — a blistering rally.

Spot gold prices have soared above $2,700 an ounce, rallying for the fifth day on Monday to hit another record high of over $2,733 an ounce. Year-to-date, spot gold is up over 30%.

And Michael Widmer, head of metals research at Bank of America, says it has further to go.

‘If gold doesn’t rally now, then I’m not sure when it ever will. Actually, I think the fundamental backdrop looks actually quite good,” he told CNBC’s “Squawk Box Europe” on Monday.

Others like John Reade, senior markets strategist at the World Gold Council, urge some caution.

CNBC Pro subscribers can discover more here.

— Amala Balakrishner

The U.S. election is about two weeks away, and who winds up in the White House and in Congress could have an effect on key corners of the stock market, according to Bank of America.

“Profits accelerating are far more important than who is sitting in the Oval Office. But politics can make or break sub-sectors,” the firm wrote in a Friday note. 

With this in mind and with volatility expected to rise as the Nov. 5 election nears, Bank of America strategists say it is now a stock picker’s market. 

“Now is not the time to close one’s eyes and buy the index,” the investment bank said. 

To read more about Bank of America’s assessment of the election on the stock market, click here.

— Hakyung Kim

Scotiabank has highlighted three biotechnology companies as their “top picks,” each with the potential to more than double in stock price over the next 12 months.

The bank believes interest rate cuts are a notable tailwind that will likely reignite wider investment interest in the biotech sector.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets are expected to open in flat to mixed territory Wednesday.

The U.K.’s FTSE 100 index is expected to open 3 points lower at 8,304, Germany’s DAX up 8 points at 19,440, France’s CAC down 9 points at 7,529 and Italy’s FTSE MIB down 47 points at 34,490, according to data from IG.

It’s a busy day for earnings Wednesday, with Deutsche Bank, Roche, Heineken, Volvo, Swedbank and AkzoNobel among the companies reporting. On the data front, Europe consumer confidence figures are due.

— Holly Ellyatt