European stock markets traded in a mixed fashion Tuesday, as investors digested regional economic data ahead of the start of the final policy meeting of the Federal Reserve this year.
At 04:55 ET (09:55 GMT), the DAX index in Germany traded 0.2% higher and the CAC 40 in France rose 0.1%, while the FTSE 100 in the U.K. dropped 0.7%.
UK pay rises more than expected
Average earnings in the UK rose by more than expected in the three months to October, data showed earlier Tuesday, prompting concerns that the Bank of England will be even slower with rate cuts, despite economic weakness.
Average weekly earnings, excluding bonuses, were 5.2% higher in the three months to the end of October than a year earlier, above the 5.0% forecast.
The Bank of England next meets on Thursday, and is widely expected to hold rates unchanged, continuing its cautious approach to easing monetary policy as inflationary concerns remain.
Data out of Germany, the eurozone’s largest economy, was also disappointing, as business morale worsened more than expected in December, weighed down by geopolitical uncertainty and a domestic industrial slump.
The Ifo institute said its business climate index decreased to 84.7 in December from a revised 85.6 the previous month.
Still, a lot of the day’s focus will be on events across the pond, with the Federal Reserve starting its final monetary policy meeting later in the session.
This is widely expected to result in a 25-bps rate reduction when the meeting concludes on Wednesday, meaning that most investors will be looking to see what the policymakers signal about the pace of easing next year.
Bunzl (OTC:BZLFY) weakens on deflation fears
In the European corporate sector, the earnings season has largely come to an end.
However, Bunzl (LON:BNZL) stock fell over 4% after the business supplies distributor said stickier-than-anticipated deflation will have a slight impact on its annual profit, especially in its Continental Europe division.
Crude slips ahead of Fed meeting
Crude prices fell Tuesday, weighed by a bout of profit-taking ahead of the latest Federal Reserve policy meeting.
By 04:55 ET, the US crude futures (WTI) dropped 1.3% to $69.80 a barrel, while the Brent contract fell 0.6% to $73.48 a barrel.
Crude prices are falling from the multi-week highs seen last week, with Monday’s weak retail sales data out of China prompting profit-taking as investors fretted about the health of the second largest economy in the world.
Traders have also moved into a holding pattern ahead of the Fed's meeting, reluctant to hold significant positions ahead of this potentially market-moving event.
