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European stocks lower on caution ahead of Fed meeting; Tui slumps

Published 14/12/2022, 09:18
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By Peter Nurse 

Investing.com - European stock markets fell Wednesday, with investors cautious ahead of the U.S. Federal Reserve’s last scheduled rate decision of the year.

At 03:55 ET (08:55 GMT), the DAX index in Germany traded 0.5% lower, the FTSE 100 in the U.K. dropped 0.4% and CAC 40 in France traded down 0.4%.

A cooler-than-expected U.S. consumer prices report helped Wall Street close higher Tuesday, but investors are showing caution Wednesday ahead of the conclusion of the Fed’s two-day policy-setting meeting later in the session.

While the cooling of price rises sets the scene for a step down in the pace of hikes–a 50 basis point rise is widely expected later Wednesday after four consecutive 75 bps increases–there are fears that this will translate into interest rates staying higher for longer.

Back in Europe, the region’s main central banks, including the European Central Bank and the Bank of England, are scheduled to release their latest rate decisions on Thursday, with rate hikes of 50 basis points expected from both.

Ahead of this, U.K. consumer prices rose by 0.4% on the month in November, resulting in an annual rise of 10.7%, a small drop from 11.1% the prior month.

Eurozone industrial production data for October are due later in the session, and are expected to show a fall of 1.5% on the month as the region suffers from soaring energy prices.

In corporate news, Inditex (BME:ITX) stock rose 1.3% after the world’s biggest fashion retailer posted a 24% increase in net profit for the first nine months of its fiscal year, as price rises helped offset weakening global demand for clothing.

Tui (ETR:TUIGn) stock slumped 8% after the German tourism company announced plans for a capital raise next year to repay COVID-19 support, after a strong summer helped it swing back into profit.

Crude oil prices edged lower Wednesday, with the recent rally stalling after industry data showed a surprise build in U.S. crude inventories, prompting concerns about demand holding up in the world’s largest consumer.

Data from the American Petroleum Institute indicated U.S. crude stocks rose by 7.8 million barrels last week, a surprise given the outage of the Keystone pipeline had been expected to result in a significant drop in inventories.

Official data from the Energy Information Administration are due later in the session.

By 03:55 ET, U.S. crude futures traded 0.1% lower at $75.30 a barrel, while the Brent contract fell 0.1% to $80.61. 

Both benchmarks had rallied sharply over the past three sessions on a combination of supply worries and expectations that Chinese demand will improve as COVID restrictions are removed.

Additionally, gold futures fell 0.3% to $1,820.00/oz, while EUR/USD traded 0.1% higher at 1.0643.

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