Europe open: Shares slip as investors eye Fed meeting

European markets slipped into the red at the open on Wednesday as investors eyed a monetary policy decision from the US Federal Reserve later in the day.

The pan-European Stoxx 600 was down 0.6% in early deals with all major regional bourses lower. Markets are looking for a US rate hike rates of half a percentage point as it looks to stymie surging inflation.

“Whether the Fed hikes by 0.50% or not has been analysed to death. The crux will be the statement and the Fed’s forward guidance on the path of interest rates,” said OANDA analyst Jeffery Halley.

“Markets, perhaps like the Fed, are clinging to the hope that the terminal Fed Funds rate is mostly priced into the market now. There remain definite upside risks to that point of view, as there are across much of the Anglo-Saxon world.”

“Perhaps the only mitigating factor will be the start of quantitative tightening by the Fed. That may have more of an impact than Fed Fund hikes if it starts pushing the US yield curve higher once again.”

On the Ukraine war front, the European Union is expected to propose additional oil sanctions on Russia as Moscow’s forces continue to bombard random targets in eastern Ukraine.

The European Commission has put forward new sanctions against the Kremlin which will include a six-month phase out of Russian crude imports.

In equity news, Kindred Group shares climbed more than 5% in early trade after US hedge fund Corvex Management disclosed a 10% stake in the online gambling company.

Shares in Belgian chemicals company Solvay also added more than 5% after raising its guidance.

Swedish construction company Skanska slid more than 7% after its first-quarter earnings report disappointed investors.

Direct Line shares fell as the UK insurer reported lower premium revenues as new rules banning excessive price hikes for loyal customers kicked in.