Europe midday: Shares still lower as investors await Fed rates decision
By Frank Prenesti
Date: Wednesday 04 May 2022
(Sharecast News) - European markets were still lower at midday on Wednesday as investors eyed a monetary policy decision from the US Federal Reserve later in the day.
The pan-European Stoxx 600 was down 0.6% with all major regional bourses lower. Markets are looking for a US rate hike rates of half a percentage point as it looks to stymie surging inflation.
"Whether the Fed hikes by 0.50% or not has been analysed to death. The crux will be the statement and the Fed's forward guidance on the path of interest rates," said OANDA analyst Jeffery Halley.
"Markets, perhaps like the Fed, are clinging to the hope that the terminal Fed Funds rate is mostly priced into the market now. There remain definite upside risks to that point of view, as there are across much of the Anglo-Saxon world."
"Perhaps the only mitigating factor will be the start of quantitative tightening by the Fed. That may have more of an impact than Fed Fund hikes if it starts pushing the US yield curve higher once again."
In the eurozone, business activity rose in April driven by activity in the services industry as Covid restrictions were eased, offsetting a near-stall in manufacturing output growth, a key survey showed on Wednesday.
S&P Global's final composite Purchasing Managers' Index (PMI) rose to 55.8 in April from March's 54.9, matching a flash estimate. A reading above 50 indicates growth.
On the Ukraine war front, the European Union is expected to propose additional oil sanctions on Russia as Moscow's forces continue to bombard random targets in eastern Ukraine.
The European Commission has put forward new sanctions against the Kremlin which will include a six-month phase out of Russian crude imports.
In equity news, TeamViewer shares were up 10% as the remote desktop software maker as first quarter profits increased.
Kindred Group shares gained after US hedge fund Corvex Management disclosed a 10% stake in the online gambling company.
Bookmaker Flutter Entertainment shares were higher as the the gambling company saw group revenues grow in the three months ended 31 March and the number of average monthly players rose by 15% to 8.85m.
Shares in Belgian chemicals company Solvay also added more than 5.8% after raising its guidance.
Swedish construction company Skanska slid more than 7% after its first-quarter earnings report disappointed investors.
Direct Line shares fell as the UK insurer reported lower premium revenues as new rules banning excessive price hikes for loyal customers kicked in.
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