Europe close: Heightened US political uncertainty weighs on shares

European stocks ended the day lower as worries about the US presidential race crept in after a new poll revealed Republican candidate Donald Trump was in the lead and ahead of the Federal Reserve’s rate announcement.

The benchmark Stoxx Europe 600 index was down 1.13%, while Germany’s DAX was 1.47% lower and France’s CAC 40 was off by 1.24%.

Crude oil futures retreated after figures from the US Energy Information Administration showed a 14.4m barrel a day in US commercial oil stockpiles during the latest week, with West Texas Intermediate down 3.2% to $45.22 a barrel and Brent crude 3.2% weaker at $46.64.

A poll released late on Tuesday by ABC News/Washington Post showed Republican nominee Donald Trump taking a one-point lead over Hillary Clinton.

IG’s Joshua Mahony said: “Global stock markets are lower this morning, as US election fears dominate, despite a week’s worth of top tier data to contend with. The sudden change in fortunes set in train on Friday has seen investors run for cover amid a realisation that Trump might actually win. Historically the economic path of the US economy has changed little in election years, yet it is the uncertainty that it would create which has many worried.

“Trump is unpredictable, which is part of his allure when compared with a somewhat robotic and scripted Clinton. With the FBI, Wikileaks and now a supposed long lost son of Bill Clinton coming out the woodwork, there is a feeling that the tide is turning against Clinton at the worst possible time.”

As far as the Fed rate decision is concerned, Societe Generale expects the central bank to hold fire on rates but signal clearly its intention to hike in December.

“Officials could follow up the reintroduction of the balance of risks language in September by noting in November that they are considering raising rates at the next meeting, similar to the language used last October ahead of the December hike,” it said.

In corporate news, container shipping company Moller-Maersk slumped after it reported a 44% drop in third-quarter profit that missed analysts’ expectations.
Deutsche Lufthansa flew lower after it said third-quarter sales and adjusted earnings fell.

On the upside, Lundbeck rallied after it posted better-than-expected third-quarter numbers and lifted its full-year revenue and profit forecasts.

Retailer Next pushed higher after it trimmed its full-year sales guidance following a drop of almost 6% in third-quarter retail sales but said profits would come in as expected thanks to cutting its cloth more severely.

Housebuilder Persimmon advanced after it said trading in the third quarter following the Brexit vote was “encouraging” but remained cautious about new land investment due to the economic uncertainty brought about by the referendum.

Ryanair flew higher after reporting a 13% jump in traffic in October to 10.9m customers, as the load factor – which gauges how full the planes are – nudged up to 95% from 94%.

G4S surged as it said revenue in the nine months to the end of September rose 5.7% from the same period last year.

On the data front, Markit’s final eurozone manufacturing purchasing managers’ index came in at 53.5 in October, up from the flash estimate of 53.3 and September’s 52.6.

This marked a 33-month high and signalled the steepest rate of improvement in operating conditions since January 2014.

Growth of production, new orders, new export orders and employment all accelerated, while price pressures showed further signs of increasing.