European shares flat ahead of Fed decision; investors assess mixed corporate updates

EUROPEAN shares ended flat on Wednesday, as investors adopted a cautious stance ahead of the US Federal Reserve’s interest rate decision, while also parsing a slate of corporate announcements.

The pan-European Stoxx 600 closed flat at 578.17, extending its pattern of trading in tight ranges during the past few sessions.

Major regional benchmarks were largely trading in the red, with ones in Germany and Spain down 0.5 per cent and 0.2 per cent respectively.

Market attention centred on the Federal Reserve’s rate decision later in the day, where the central bank is expected to trim interest rates by 25 basis points.

However, comments from Chair Jerome Powell will be scrutinised for clues on how the bank will approach monetary policy next year amid sparse economic data and the U.S. administration’s push for lower rates.

“This may be another hawkish cut, but we definitely do not think the rate-cutting cycle is over,” said Guy Stear, head of developed markets strategy research at Amundi.

“We expect a pause in Q1, but think the Fed will cut twice in Q2 as the effects of the US budget will lead to cuts in the spending habits of the less affluent US consumer.”

An index of automakers led losses, down 1.5 per cent, dragged lower by a 4.8 per cent drop in luxury carmaker Ferrari. Morgan Stanley initiated coverage with an ‘equal weight’ rating, while Jefferies lowered its target price on the stock.

Industrial stocks that buoyed the market in recent sessions fell 0.35 per cent, with defence firms weighing. The European aerospace and defence index lost 0.8 per cent after gaining more than 2 per cent in the previous two sessions.

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Vinci lost 3.1 per cent after BNP Paribas downgraded the French infrastructure and concessions group to “neutral” from “outperform”, with the brokerage forecasting a muted 2026 for European transport and infrastructure firms.

Construction and materials index fell 0.8 per cent.

Aegon was the worst-performing stock for the day, losing over 10 per cent after the insurer said it would move its legal domicile and head office to the US from the Netherlands.

Bucking the trend on Stoxx 600, commodity-linked stocks edged higher, with oil companies and miners up 0.2 per cent and 0.75 per cent respectively.

Banks also supported with a 0.7 per cent jump, with heavyweight HSBC gaining 3.2 per cent. BofA Securities upgraded the lender to “buy” from “neutral”, citing growth prospects in Hong Kong deposits and Asian wealth management.

Delivery Hero jumped 13.7 per cent after the firm said it was reviewing capital allocation measures and evaluating strategic options, in a letter to shareholders on Tuesday.

Renewable energy firms extended Tuesday’s gains with Nordex up 8 per cent, Siemens Energy gaining 4.3 per cent and Vestas Wind Systems up 4.2 per cent. US peer GE Vernova on Tuesday forecast higher 2026 revenue and boosted its share buyback plan.

French lawmakers narrowly approved the 2026 social security budget on Tuesday, handing the government a victory but at a political and financial cost.

“It does little to resolve France’s underlying fiscal and political challenges... the broader state budget remains unsettled, and the narrow margin for this win highlights the government’s continued vulnerability,” said analysts at UBS Global Wealth Management.

France’s benchmark CAC 40 was down 0.4 per cent.

Meanwhile, European Central Bank President Christine Lagarde suggested that the ECB may raise its growth projections next week, owing to the resilience of the eurozone economy. REUTERS