European shares flat as investors await Fed minutes

by Jonathan Adams

Minutes from the Federal Reserve’s latest policy meeting, where it held rates steady, are due at 1900 GMT

European shares were subdued on Tuesday as declines in telecom and energy stocks offset gains in materials, while investors awaited minutes from the Fed’s latest meeting to support bets that policymakers are done with interest rate hikes.

The pan-European STOXX 600 was little changed by 0920 GMT.

Minutes from the Federal Reserve’s latest policy meeting, where it held rates steady, are due at 1900 GMT.

The theme permeating the market is the Fed’s battle with inflation has been won and that despite what the likes of Powell and his colleagues might be saying about another hike still being on the table, market does not really believe that message anymore, said Stuart Cole, head macro economist at Equiti Capital.

In the meantime, ECB officials have actively tried to shoot down growing speculations of rate cuts amid data indicating a sustained drop in inflation and a likely recession.

ECB policymaker Francois Villeroy de Galhau contended rates will likely stay unchanged for the next few quarters, a day after Pablo Hernandez de Cos noted it was “premature” to talk about rate cuts. Euro zone sovereign bond investors were on hold on Tuesday.

Telecom stocks shed 0.4 per cent, while energy lost 0.5 per cent, tracking declining oil futures ahead of an OPEC+ meeting.

Material stocks led sectoral gains, up 0.7 per cent, while retail stocks added 0.6 per cent.

Among individual companies, Swiss hearing aid maker Sonova topped the STOXX 600, adding 6.2 per cent after a lower-than-expected warning on annual core profit.

Rheinmetall added 3.8 per cent as the German firm expects sales of €13 billion-€14 billion ($14.18 billion to $15.27 billion) in revenue in 2026 and operating margins of over 15 per cent.

In the meantime, Monte dei Paschi di Siena shed 6.2 per cent after Italy sold a 25 per cent stake in the bailed-out bank.

Teamviewer lost 8.7 per cent after Deutsche Bank on behalf of TigerLuxOne (Permira) launched a placement of 13 million shares in the German software firm at a discount of around 8 per cent to Monday’s closing price.

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