Business

European shares flat as investors await outcome of crucial Federal Reserve meeting

Luxury goods groups decline as shares in Gucci owner Kering tumble almost 12%

People walking by the New York Stock Exchange. The Dow was up slightly in late morning trading as traders waited for the Federal Reserve's latest decision on interest rates. Photograph: Spencer Platt/Getty Images

Laura Slattery
Wed Mar 20 2024 - 18:33

European shares were flat on Wednesday, pressured by a sell-off in luxury stocks. There was an absence of big bets by investors ahead of a crucial Federal Reserve meeting later in the day, in which the US central bank was expected to keep interest rates unchanged and provide cues on its monetary policy trajectory.

Meanwhile, some top European Central Bank officials, including president Christine Lagarde, tried to dampen speculation about a streak of interest rate cuts.

Dublin

The Iseq edged 0.4 per cent lower, echoing the muted mood of investors across European stock markets, rather than reacting to local political news which saw Leo Varadkar signal his intention to step down as Taoiseach. Ryanair was among the climbers, advancing 0.6 per cent to €21.00 as chief executive Michael O’Leary met executives from Boeing in Dublin to discuss aircraft deliveries.

Cairn Homes rose 2.4 per cent to €1.61, while building materials company Kingspan added 0.5 per cent to €83.78.

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There was a more sluggish day for financial stocks, however, with AIB declining 2.6 per cent to €4.63 and Bank of Ireland ending 2 per cent lower at €8.90. Packaging giant Smurfit Kappa declined 0.7 per cent to €41.80.

London

London’s FTSE 100 closed flat with caution looming ahead of the Federal Reserve’s policy decision, while softer domestic inflation data cemented bets of interest rate cuts this year from the Bank of England. UK inflation cooled to 3.4 per cent in February ahead of the Bank of England’s monetary policy verdict on Thursday.

The domestically-focused FTSE 250 added 0.3 per cent, with Johnson Matthey gaining 7.8 per cent to hit a 10-month high following the chemicals maker’s announcement that it will sell its medical device components business to Montagu Private Equity for $700 million (€644m).

Burberry fell 3.3 per cent, tracking a fall in European luxury goods group Kering, which warned about a potential sales drop in the first quarter.

Halma rose 3.9 per cent after analysts at UBS upgraded the technology firm to “buy” from “neutral”.

Europe

The pan-European Stoxx 600 index ended largely unchanged. Kering shares tumbled 11.9 per cent after the French luxury group warned its first-quarter sales are likely to drop by around 10 per cent, weighed down by star label Gucci due to weakness in Asia.

Combined with a profit warning from Burberry in January, the high-end sector is grappling with a worsening slowdown in demand for luxury goods. In a sector-wide reaction other luxury stocks such as LVMH, Burberry, Richemont and Christian Dior dropped between 1.6 per cent and 3.2 per cent.

Shares in Lonza rose 5.7 per cent after the Swiss contract drug manufacturer agreed to buy Roche’s Genentech manufacturing facility in California for $1.2 billion (€1.1bn) in cash.

US

Wall Street’s main stock indexes were little changed in early trading as investors awaited the conclusion of the Federal Reserve’s meeting. Focus will be on the Fed’s policy statement, updated economic projections and chairman Jerome Powell’s press conference.

US-listed shares of BioNTech shed 6 per cent on reporting a plunge in 2023 revenue and earnings as its focus shifts towards cancer drug development. Fellow Covid vaccine makers Moderna and Novavax eased 2.7 per cent and 4.8 per cent respectively.

Tesla gained 0.9 per cent after confirming to Reuters that it will raise the price of China-produced Model Y vehicles from April.

The Biden administration said it is awarding Intel nearly $20 billion in grants and loans, lifting shares of the chipmaker up 0.3 per cent.

Chipotle Mexican Grill climbed 5.3 per cent after the company said its board had approved a 50-for-1 split of its common stock. – Additional reporting: Reuters

Laura Slattery

Laura Slattery

Laura Slattery is an Irish Times journalist writing about media, advertising and other business topics

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