Europe open: Stocks drop on US election uncertainty as investors eye Fed

European stocks declined on Wednesday 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.

At 0835 BST, the benchmark Stoxx Europe 600 index was down 0.8%, while Germany’s DAX and France’s CAC 40 were both 0.9% lower.

Meanwhile, oil prices retreated, with West Texas Intermediate down 1.1% to $46.14 a barrel and Brent crude 1.1% weaker at $47.61.

Rebecca O’Keeffe, head of investment at Interctive Investor, said: “The possibility of a Trump victory has started to spook markets, with global equities falling, volatility rising and safe haven assets back in favour. Despite multiple other market risks and global central bank decisions due, the only thing that really matters to investors is who will claim victory next week, with the outcome likely to deliver dramatically different stock market reactions. A Hilary Clinton victory is perceived as bringing stability to the market, whereas the uncertainty around a Donald Trump victory is likely to see stocks fall in the short term as investors try to work out which sectors and industries might benefit and which will fall.”

As far as the Fed decision is concerned, she said that although the market is pricing in a one in six chance of the central bank raising rates tonight, “the potential for a surprise US election result and extreme nervousness from investors is likely to result in caution from Janet Yellen and the Fed, who will not want to be seen to create any more tension for voters or investors”.

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, the eurozone manufacturing purchasing managers’ index is at 0900 GMT. In the US, the ADP employment report is at 1215 GMT and the FOMC rate decision is at 1800 GMT.