European stocks lower; LVMH weighs ahead of Fed rate decision

European stock markets retreated Wednesday, as investors digested a slew of quarterly corporate earnings ahead of a Federal Reserve meeting which is expected to result in another rate increase.

At 03:30 ET (07:30 GMT), the DAX index in Germany traded 0.3% lower, the CAC 40 in France dropped 1.2%, while the FTSE 100 in the U.K. traded largely flat.

Earnings continue to pour in
The deluge of quarterly corporate results continued Wednesday.

LVMH (EPA:LVMH) stock slumped 4.2% after the world’s largest luxury group posted a rise in sales in the second quarter that suggested growth was trending back to more normal levels.

Deutsche Bank (ETR:DBKGn) stock fell 1.5% after the German lender posted a 27% fall in second-quarter profit as investment banking revenues slumped, but this was partly mitigated by gains at its retail division.

In the auto sector, Stellantis (EPA:STLAM) stock rose 0.6% after the world’s third-largest carmaker by sales said its operating profit rose 11% in the first half of this year, with revenue increasing on higher vehicle shipments.

Aston Martin (LON:AML) stock climbed 6.4% after the luxury carmaker reported a smaller pretax loss for the second quarter, helped by higher sales, and kept its 2023 forecasts unchanged.

Elsewhere, Rolls-Royce (LON:RR) stock soared over 20% the aero-engineer raised its full-year operating profit forecast by around 45% after military spend and a recovery in long-haul flying delivered a stronger-than-expected first half.

Puma (ETR:PUMG) stock rose 1.3% after the German sportswear company said its second-quarter sales grew by 11%, slightly ahead of market expectations, boosted by China sales and resilient Europe.

GSK (LON:GSK) stock rose 1% after the pharma giant raised its full-year earnings guidance after strong second-quarter sales, while NatWest (LON:NWG) stock fell almost 3% following the resignation of CEO Alison Rose resigned earlier Wednesday after she admitted to a “serious error of judgment” in discussing former Brexit party leader Nigel Farage’s relationship with the bank with a BBC journalist.

Across the Atlantic, Meta Platforms (NASDAQ:META) stands out as the highlight of another busy session, while investors will also digest largely solid results from fellow tech giants Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) overnight.

Fed set to lift interest rates, again
It’s decision day at the Federal Reserve, and investors around the globe are widely expecting the U.S. central bank to raise interest rates by a quarter of a percentage point later in the session.

This would be the 11th hike in its past 12 policy meetings as the central bank moved aggressively in its battle to tame soaring inflation.

However, with prices now on the retreat, investors are hopeful that this will be the Fed’s last rate increase, and thus the focus will be on the subsequent news conference for Chair Jerome Powell’s comments on likely future decisions.

This communication could set the tone for European markets ahead of a policy decision from the European Central Bank on Thursday.

Oil prices dip after U.S. inventories rise
Oil prices retreated from three-month highs after industry data showed a rise in U.S. crude stockpiles, suggesting that supplies were not as tight as previously thought in the important American market.

Data from the American Petroleum Institute, released Tuesday, suggested U.S. crude stocks rose by 1.3 million barrels in the past week. Official numbers from the Energy Information Administration will be studied later in the session for confirmation.

By 03:30 ET, U.S. crude futures traded 0.2% lower at $79.48 a barrel, while the Brent contract dropped 0.2% to $83.10.

Both benchmarks hit their highest levels since April on Tuesday amid concerns over tighter supplies and pledges by Chinese authorities to shore up the world’s second-biggest economy and largest crude importer.

Additionally, gold futures rose 0.3% to $1,969.90/oz, while EUR/USD traded 0.1% higher at 1.1063.