LONDON — European stocks were lower on Tuesday as global markets await the U.S. Federal Reserve’s interest rate decision.
By 8:58 a.m. in London (4:58 a.m. ET), the pan-European Stoxx 600 was trading 0.2% lower, with most sectors and major bourses trading in negative territory. Bucking the trend was the utilities sector, often seen as a somewhat stable investment amid market volatility.
The moves on Tuesday marked a reversal from the previous session, which saw stocks end higher amid hopes of Sino-U.S. trade tensions thawing. President Donald Trump and Chinese President Xi Jinping are due to meet in South Korea on Thursday.
Both sides appear to be in a conciliatory mood, having agreed on a framework for a potential trade deal which addresses China rare earths export restrictions, soybean purchases and TikTok.
“I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said Monday. The leaders are due to meet on the sidelines of the Asia-Pacific Economic Cooperation, or APEC, Summit.
Looking at individual stocks, shares of Novartis fell 3.3% after the Swiss pharmaceutical giant reported its earnings for the three months to September. The firm’s third-quarter constant currency sales grew 7% from the previous year, while net income jumped 25% year-on-year to hit $3.9 billion. Analysts had been expecting net income to come in at $4.4 billion, according to a consensus estimate compiled by LSEG.
In financial services, BNP Paribas‘ shares were 3% lower early Tuesday after the French lender reported group pre-tax profits of 4.28 billion euros, beating the 3.44 billion euros estimated by analysts, according to LSEG. The bank’s revenues for the period reached almost 12.6 billion euros, which was slightly lower than the 12.8 billion euros forecast by analysts. BNP’s third-quarter earnings report also flagged a “specific credit situation” during the quarter, which it said drove up the cost of risk in its Global Markets division.
Meanwhile, London-listed shares of HSBC were up 2.5% in early trading, after the lender’s third-quarter earnings beat expectations.
The big event for investors this week is the Fed’s two-day meeting, which begins on Tuesday. The market is now pricing in a 96% chance that the U.S. central bank will announce a 25 basis-point rate cut this week, according to the CME Fedwatch tool.
Traders are also hoping for a signal from Fed Chair Jerome Powell on Wednesday that the central bank will cut once more at its final meeting of the year in December, given concerns about a weakening labor market.
The Fed is dealing with an economic data blackout given the ongoing U.S. government shutdown, with last week’s inflation report one of the few data pieces to be released recently.
— CNBC’s Pia Singh and Hugh Leask contributed to this market report.
