European shares drifted lower on Wednesday, as investors braced themselves in advance of an all-important interest rate decision by the US Federal Reserve that could mark the beginning of a monetary easing cycle in the world’s largest economy.
The pan-European Stoxx 600 index closed 0.5 per cent down, with the food and beverages gauge leading losses among big sectors, down 1 per cent.
By the time European markets closed, money markets were pricing in a 53 per cent chance of a 0.5 percentage point reduction from the Fed hours later, according to CME’s FedWatch Tool.
It would be the first cut by the US central bank in four years and follows a period of aggressive hikes to tackle inflation.
Dublin
The Iseq All Share index lost 0.6 per cent to 9,789.36. Rate-sensitive banking stocks were mixed, with AIB down 0.8 per cent at €5.40, while Bank of Ireland edged 0.6 per cent higher to €10.01 and PTSB added 2.4 per cent to €1.69.
Banks’ profitability typically is boosted in a high-rates environment.
Home builders were also in focus, with Cairn down 0.5 per cent at €1.85 and Glenveagh Properties off 0.9 per cent at €1.54. The Central Bank said on Wednesday that Ireland needs 52,000 homes a year for the next 25 years.
Ryanair lost 0.8 per cent to €16.10 as it returned some of the previous day’s gains, which had been driven by positive commentary from the carrier out bookings.
London
UK stock indexes dropped as investors reined in bets on interest rate cuts by the Bank of England, while global risk sentiment was fragile in advance of a the Fed decision.
The blue-chip FTSE 100 ended 0.7 per cent lower, racking up the steepest losses among European peers.
UK annual consumer price inflation was steady at 2.2 per cent in August, in line with forecasts, data showed. However, services inflation – a figure closely watched by the Bank of England – rose to 5.6 per cent, slightly more than forecast.
The pound rose against the dollar following the inflation data, which further pressured the FTSE 100′s export-focused companies.
Reckitt Benckiser rose 1.2 per cent after a media report the company is in early discussions with potential suitors for a sale of its homecare assets.
Losses were broad based across most sectors with the exception of defence and telecoms.
Europe
Shares of Italian spirits group Campari dropped 7.5 per cent after its chief executive Matteo Fantacchiotti abruptly quit after only five months in charge, with the company citing personal reasons for his departure.
The heavyweight healthcare sector index lost 0.7 per cent as Danish drugmaker Novo Nordisk fell 2.4 per cent after a report that its diabetes drug Ozempic is “very likely” one of the next drugs targeted for a price cut in the US.
Among other stocks, Germany’s BASF gained 2.4 per cent following a media report that the chemical company plans to prepare its agricultural chemicals business for an initial public offering in the next few years as part of restructuring measures set to be announced this month.
France’s Ubisoft Entertainment jumped 6.6 per cent after BMO Capital Markets raised the rating on the stock to outperform, the equivalent of a buy, saying the shares are too cheap to ignore.
New York
Wall Street’s main stock indexes were lower in early afternoon trading, in advance of the Fed’s rates decision.
US markets have rallied this year, with all three big indexes setting record highs on prospects of lower interest rates as inflation moderated and the jobs market showed gradual signs of cooling.
Heavyweight growth stocks such as Apple and Alphabet climbed while Microsoft slipped.
Intuitive Machines jumped after clinching a $4.8 billion navigation services contract from Nasa.
US Steel rose on reports said the US national security panel reviewing Nippon Steel’s bid for the US-based steel maker let the companies refile their application for approval of the deal. – Additional reporting: Reuters
- Sign up for the Business Today newsletter and get the latest business news and commentary in your inbox every weekday morning
- Opt in to Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
