Europe midday: Shares stay lower as investors eye FOMC minutes

21st Feb 2024 10:53

(Sharecast News) - European markets struggled for direction on Wednesday amid another raft of corporate earnings, with HSBC in focus as the bank delivered a record jump in annual earnings that missed estimates, sending the shares in the lender lower.

The pan-European Stoxx 600 index was down 0.15% to 491.05 with regional bourses mixed. Investors are looking ahead for Federal Reserve policy meeting minutes for clues on the timing of rate cuts, although noises from the central bank in recent weeks have dampened hopes of an easing any time soon.

"While markets have shifted their expectations around the timing of the first rate cut from March to June, the current prediction of four 25 basis point cuts does still contrast from recent Powell comments calling for two or three," said Scopemarkets analyst Joshua Mahony.

"Today's FOMC minutes provide the basis for further hawkish tones, which could help lift the dollar should we see the committee once again reiterate their cautious approach for the year ahead."

In economic news, the UK recorded its largest January budget surplus in at least three decades, fuelling talk of a pre-election tax-cut giveaway, even though the government has pencilled in a second round of austerity cuts to public services starting next year.

There £16.7bn surplus, the largest surplus since monthly records began in 1993, was double that of January 2023.

However, economists at the EY Item Club said Finance Minister Jeremy Hunt's headroom for tax cuts was limited, given investors would be "reining back their expectations on interest rate cuts this year, a weaker-than-expected economy, and some fiscal downsides from lower inflation".

In equity news, HSBC fell despite a 78% jump in annual pre-tax profits to $30bn, missing forecasts of $34bn as it took a $3bn hit from its investment in a Chinese bank.

Glencore fell after annual results reflected the slide in global metals prices.

NKT made gains as the Danish power cable and optical parts maker posted strong annual results.

Reporting by Frank Prenesti for Sharecast.com