European markets are cautious as investors focus on the Fed’s next move; Maersk down 7%

Danish hearing care company Demant fell more than 12% in the early afternoon to the bottom of the Stoxx 600 after its preliminary third-quarter earnings report.

Maersk, the world’s largest container shipping company, saw its shares fall more than 7% after posting record third-quarter profits on high ocean freight rates, but noted a slowdown in demand.

At the top of the European blue chip index, Vestas shares rose more than 7% after the Danish wind power company’s earnings call helped ease market concerns over its earlier report.

– Elliot Smith

Spanish factory activity fell sharply in October, the fourth straight month of contraction as high inflation pushed output and new orders down.

The S&P Global manufacturing PMI (purchasing managers index) fell to 44.7, the lowest level since May 2020, from 49.0 in September. Any reading below 50 represents a contraction.

– Elliot Smith

Maersk, the world’s largest container shipping company, on Wednesday reported record third-quarter profits due to high ocean freight rates, but noted a slowdown in demand.

The Danish giant, widely seen as a barometer of global trade, reported earnings before interest, tax, depreciation and amortization (EBITDA) of $10.9 billion for the quarter, above consensus analysts’ forecasts of $9.8 billion and up by about 60% from the same period. years ago.

CEO Søren Skou said the “exceptional results” this year were driven by a continued increase in ocean freight rates, but said it was clear these had peaked and warned of “dark clouds on the horizon.”

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– Elliot Smith

Corporate earnings remain a key driver of individual share prices in Europe.

Danish hearing care company Diamond fell more than 11% in early trading to the bottom of the Stoxx 600 after its preliminary third-quarter earnings report.

At the top of the index, Swiss dental care company Straumann rose 4% after its quarterly results.

Oil futures rose on Wednesday after industry reports showed a drop in U.S. crude inventories in the past week, Reuters reported, citing figures from the American Petroleum Institute on Tuesday.

Brent crude futures rose $1.31, or 1.46%, to stand at $95.87 a barrel, while USA West Texas Intermediate rose 1.28% to $89.67 a barrel.

– Lee Ying Shan

There is huge demand for cars in both the US and China right now, according to fund manager Steven Glass.

He singled out an auto stock to redeem, which he said has a “very well-run” balance sheet and a price-to-earnings ratio at a 20-year low.

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— Zavier Ong

Investors may be getting a little too excited about potential changes from the Federal Reserve, according to Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

Goodwin said in a note that she expected the Fed to hike by 0.75 percentage points on Wednesday and half a point in December, but that the decline should not be seen as the start of a major shift by the central bank.

“A Fed pause is not the same as a pivot. Certainly, worsening economic and credit conditions could cause the Fed to swing modestly at some point, but a full swing into accommodative territory is highly unlikely over the next year,” Goodwin said in a note.

Goodwin pointed out that the first rate hikes should now begin to show their effect across the broader economy, rather than just housing. However, the Fed will need several months of data to go its way before changing course.

“At this point, with inflation surprising as much as it already has, the Fed will want to see clear signs of reversal in wage growth before it swings. Recession should be considered a base case rather than a risk,” Goodwin said.

— Jesse Pound

Goldman’s Jeff Currie says there is an investment that can protect investors from rising interest rates, inflation and geopolitical risk.

Currie, global head of commodities research at Goldman Sachs, said it has 20-30% growth potential in the near term, with additional upside risks to the price target.

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— Ganesh Rao

European markets are eyeing a positive start to trading on Wednesday as investors brace for the latest monetary policy decision from the US Federal Reserve.

Many analysts expect the meeting to result in a rate hike of 75 basis points. Investors will also monitor the central bank’s statement and Fed Chairman Jerome Powell’s press conference for signs that the pace of tightening is slowing.

London’s FTSE index is expected to open 21 points higher at 7,115, Germany’s DAX up 84 points to 13,422, France’s CAC up 36 points to 6,364 and Italy’s FTSE MIB up 119 points to 22,771, according to data from IG.

The revenue comes from Next, Aston Martin Lagonda, GSK, Metro and Maersk. German unemployment figures for October will also be released.

—Holly Ellyatt