Europe: Shares dip amid caution ahead of ECB policy decision; miners limit losses

EUROPEAN equities ended lower on Tuesday (Jan 23) as investors refrained from making big bets ahead of the European Central Bank’s (ECB) policy meeting later this week, while advancing mining stocks helped limit losses.

The pan-European Stoxx 600 index ended 0.3 per cent lower, with utilities and rate-sensitive real estate stocks among the top losers, down 0.8 per cent and 1.3 per cent respectively, while heavyweight healthcare stocks shed 0.9 per cent.

On the bright side, base and precious metal miners added 2.0 per cent as most base metal prices advanced, while copper prices were supported by hopes that top metals consumer China will unleash more stimulus to boost its economy.

China-exposed luxury firms including LVMH, Kering and Richemont were up between 1.1 per cent and 1.7 per cent.

Leading up to the ECB’s rate verdict, figures released on Tuesday showed eurozone consumer confidence fell by 1.0 point in January from the December number.

“We doubt the decline is the start of a new trend and expect a more sustained rebound soon, now that inflation of frequent out-of-pocket purchases is declining sharply,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.

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While a pause in interest rate hikes is nearly priced in for the upcoming ECB meeting, traders anticipate cuts of around 130 basis points this year, with a near 97 per cent chance of the first reduction in June.

Spanish stocks lagged regional peers, falling 1.1 per cent, bogged down by a 1.9 per cent fall in Iberdrola as Barclays downgraded the utility’s stock to “equal-weight” from “overweight”.

As the earnings season picked up pace across the continent, LSEG I/B/E/S data showed fourth-quarter earnings for Stoxx 600 companies are expected to decline 8.8 per cent from Q4 2022 versus a 7.1 per cent drop expected last week.

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Europe: Shares rise as Wall Street rallies; ECB decision in focus

Computer peripherals maker Logitech raised its full-year sales and profit guidance. Its shares, however, fell 8.7 per cent as investors took profits after the stock on Monday hit its highest level since October 2021.

Swatch slipped 4.6 per cent after the world’s biggest watchmaker missed market estimates for its 2023 results.

Allfunds jumped 8.7 per cent after Reuters reported that Swiss stock market operator Six Group is considering a bid for the fund distribution company.

Dutch tech investor Prosus advanced 5.4 per cent after checks by Reuters showed China’s gaming regulator has taken down draft rules to control spending on video games from its website.

HelloFresh jumped 12 per cent after Morgan Stanley upgraded the German meal-kit delivery firm to “overweight” from “equal-weight”.

Volkswagen added 5.4 per cent after a call with analysts fuelled bets that the German car maker might unveil fourth-quarter sales above current market expectations when it discloses results in March. REUTERS