By Shreyashi Sanyal
(Reuters) – European shares closed lower for the first time in seven sessions on Tuesday, as weak earnings dampened optimism surrounding the U.S.-China trade progress and ahead of an expected interest-rate cut by the U.S. Federal Reserve later this week.
The pan-European STOXX 600 <.STOXX> fell 0.2% after scaling a 21-month high in the previous session, tracking record gains for Wall Street’s S&P 500 index <.SPX>. [.N]
“The markets are at new highs in Europe and in the U.S. and that is also something that could be pushing investors to take some profit,” said Roland Kaloyan, head of European equity strategy at Société Générale.
Finnish paper firm Stora Enso’s
Telecom stocks <.SXKP> lost 1.7%, the most among the major European sub-sectors, hurt by a 2.6% slide in shares of Orange
A top executive at France’s number one telecoms operator said sales in Spain, the telecoms group’s second-biggest market, would remain under pressure from competitors cutting prices in coming months.
The oil and gas sector <.SXEP> fell 0.9%, dragged down by British energy firm BP
Also weighing on the sector was British oilfield services firm Hunting
Financials <.SXFP> were pulled lower by a 2.4% drop in Deutsche Boerse
Expectations were low going into the European corporate earnings season, but after its three busiest weeks the overall picture has been slightly better than expected with companies pulling off modest beats.
Banks <.SX7P> were dragged lower by shares of Swedbank
Among positive movers, shares of German healthcare group Fresenius
The catalyst for markets this week is expected to be the Fed meeting where officials are expected to cut interest rates for the third time this year, but focus will be squarely on further clues from the central bank on the policy path ahead.
“Markets are 90% pricing in a [rate] cut,” said David Madden, analyst at CMC Markets.
“I don’t think they’ll be leaving the door open for another cut in 2019 or early 2020 because that could just be setting [expectations] that every time the markets fear a recession, a rate cut is warranted.”
(Reporting by Shreyashi Sanyal in Bengaluru; Additional reporting by Agamoni Ghosh and Lisa Pauline Mattackal; Editing by Shounak Dasgupta, Arun Koyyur and Ed Osmond)