Europe midday: Stocks flat as risk appetite declines ahead of FOMC decision
European stocks were struggling for direction on Wednesday, with most major indices trading broadly flat as investors showed their nerves ahead of a Federal Reserve monetary policy decision later on.
The pan-European Stoxx 600 index was up just 0.08% or 0.3 points at 434 by 1222 CET, with just 2.7 points separating the day's high and low. The index rose by 1% over Monday and Tuesday – bouncing back after hitting a 10-month low last week – helped by data which showed that Eurozone inflation eased more than expected, raising hopes that the European Central Bank would start to cut interest rates sooner than anticipated next year.
Investors are now looking ahead to the potentially market-moving conclusion of the two-day Federal Open Market Committee meeting in Washington, with a decision due out after markets close at 1800 GMT.
“The broad expectation is the Fed will sit on its hands for now, so all the focus is likely to be drawn to any hints dropped about the future direction of monetary policy," said AJ Bell investment director Russ Mould. “Given the volatile economic and geopolitical backdrop, Jerome Powell will have to weigh any words in the accompanying statement carefully if he wants to avoid giving investors the jitters.”
Eyes turn to economic data
Economic data will also be in focus on Wednesday, with the closely watched ADP Employment Report from the US due out at 1215 GMT, along with ISM US manufacturing figures.
Closer to home, the UK Nationwide housing price index unexpectedly rose by 0.9% in October after a revised 0.1% increase in September, surprising analysts who had expected a fall of 0.4%.
Meanwhile, the Caixin PMI showed that China's manufacturing sector unexpectedly contracted for the first time in three months in October, with the headline PMI falling to 49.5 from 50.6 the month before. The consensus forecast was for a pick-up to 50.8.
Pharma stocks in focus
GSK initially rallied after the drug maker lifted its full-year profit outlook, but shares fell into the red before midday in London. The UK-listed firm now expects turnover to increase by 12% to 13%, up from previous guidance of 8% to 10%, and adjusted operating profit growth of 13% to 15%, up from 11% to 13%.
In Paris, biopharmaceutical group Cellectis saw shares nearly treble in price after sector giant AstraZeneca announced it would acquire a 44% stake in the company to access its gene-editing technologies and manufacturing capabilities. The stock was up 180% at €2.53 by lunchtime.
Swedish building company Skanska tanked 11% after missing forecasts with a 66% drop in third-quarter operating income.
UK high street retailer Next rose strongly after boosting its full-year guidance as third-quarter trading beat internal expectations.