Europe open: Stocks waver ahead of Fed announcement

European stocks wavered in a tight range in early trade, as investors sifted through earnings ahead of the Federal Reserve’s rate announcement.

At 0845 BST, the benchmark Stoxx Europe 600 index was down 0.3%, Germany’s DAX was 0.2% lower and France’s CAC 40 was 0.1% weaker.

At the same time, oil prices advanced, with West Texas Intermediate up 1.2% to $44.55 a barrel and Brent crude 1.2% firmer at $46.30.

“Equity markets remain tentative ahead of tonight's Fed decision and statement. No one is expecting a rate hike from the Fed today, nor is the market expecting a move in June," said Rebecca O’Keeffe, head of investment at Interactive Investor.

"However, with the US labour market continuing to recover, and rising commodity prices suggesting an imminent pick-up in inflation, the Fed may want to keep open the possibility of raising rates in June. There is therefore scope for an unpleasant surprise in the Fed's communication this evening versus the current dovish market expectations.”

“The earnings season is showing up considerable disparity in sector performance, with the technology sector underperforming expectations, while oil companies continue to surprise on the upside. The significant differences in sector returns confirm what a stock-pickers market this is, underlining the opportunity available for active traders and funds versus their passive counterparts.”

After the close on Tuesday, shares in technology giant Apple fell sharply after its first-quarter results revealed the first drop in revenue in 13 years as iPhone sales dropped for the first time ever.

In European corporate news, Barclays was a high riser. Although it posted a decline in first-quarter profit amid weakness in the investment banking division, the numbers were better than expected.

Delhaize was also in the black after the Belgian food retailer said net profit in the first quarter rose 291%.

Banco Santander pushed up after its first-quarter net profit and net interest income came in pretty much as expected, while oil giant Total gained after its quarterly profit beat analysts’ estimates.

Adidas rallied after the German sports retailer lifted its full-year profit guidance for the second time in less than three months.

On the macroeconomic front, the latest findings by market research group GfK showed German consumer sentiment was set to improve markedly in May from April.

GfK said the overall index was forecasting 9.7 points for May compared to 9.4 points the month before, with growth for both economic and income expectations as well as propensity to buy.

Economists had been expecting the index to be unchanged at 9.4.

The Fed rate announcement is due after the European close at 1900 BST.