Europe midday: Markets lower despite Sino-US optimism, Fed meeting eyed
European stocks were at lunchtime on Tuesday despite US President Trump bolstering hopes for a trade deal with China, as investors eyed Wednesday's Fed meeting and a possible UK general election.
At 1200 GMT, the Stoxx 600 was 0.4% lower at 397.39, as Germany's Dax dropped by 0.1% to 12,924.13 and the French CAC 40 remained roughly flat at 5,728.37. In London, the FTSE 100 was down by 0.7% at 7,277.75.
Sino-US trade optimism received another shot in the arm after Donald Trump said Washington is "ahead of schedule" to sign "a very big portion of the China deal" at next month’s APEC summit in Chile.
Oanda analyst Craig Erlam said: "Trump and his team have repeatedly stressed the progress made in recent days and the prospect of it being wrapped up earlier than anticipated, although by now we should take this kind of rhetoric with a pinch of salt."
Investors are now turning their attention towards Wednesday's Fed meeting, which is expected to yield the year's third cut to interest rates.
London Capital Group analyst Ipek Ozkardeskaya said: "Good-looking third-quarter earnings point at an increasing possibility of a hawkish rate cut, meaning that the Fed will likely serve the 25-basis-point cut with a hawkish accompanying statement at this week’s banquet."
UK Labour leader Jeremy Corbyn said his party will support an early general election, telling the shadow cabinet his condition of taking a no deal Brexit off the table has now been met.
Later in the day, Prime Minister Boris Johnson is set to make a fourth attempt to call for an early general election on 12 December, with a national vote now seemingly certain after the SNP and Liberal Democrats also voiced support for an election.
XTB analyst David Cheetham said: "The initial market reaction to this has been quite curious with the pound actually rising in response to the news. Elections are often seen as bringing heightened uncertainty and therefore negative in the near-term for affected markets, but in this case there is a hope that it will bring an end to the present quandary we find ourselves in.
"The pound will likely stay fairly well supported unless a no-deal outcome becomes more than marginally possible once more and there is also the hope that a softer version of Brexit than the latest WAB could receive greater support."
Among individual stocks, Fresenius topped the Stoxx 600 after the German healthcare group beat third-quarter revenue forecasts on the back of a strong performance in emerging markets.
Straumann rose after it hiked its outlook for annual organic revenue growth and confirmed it would buy US dental product manufacturer Bay Materials.
Finnish paper manufacturer Stora Enso was the top faller after it missed third-quarter sales and operating profit expectations, and warned that growth in demand will decelerate.
Other paper-based product manufacturers such as UPM-Kymmene, Mondi and Smurfit Kappa were also in the red.