European shares slip as investors brace for Federal Reserve minutes

European shares slipped on Wednesday, hurt by banking shares following a drop in shares of HSBC on a disappointing earnings report, while investors braced for the Federal Reserve’s last meeting minutes for any clues on the central bank’s rate outlook.

Earnings and updates from companies across the Continent have been mixed for the quarter, though the benchmark Stoxx 600 index hit a two-year high recently as investors focused on the possibility of a first interest rate cut by the European Central Bank this year.

Dublin

The Iseq rose 0.8 per cent, beating the trend, after it was boosted by gains for many of its biggest stocks. Kingspan, the most active stock in the session, closed up 1.3 per cent at €86.26. Ryanair added 0.7 per cent to finish at €20.23, while food group Kerry advanced 0.6 per cent to €79.46.

It was a good day for the Irish banks, which were unaffected by the general trend for banking stocks across Europe, with AIB rising 1.9 per cent to €4.23, and Bank of Ireland up 0.6 per cent at €8.49.

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But packaging group Smurfit Kappa edged down 0.3 per cent to €37.97.

London

Britain’s blue-chip share index closed lower on Wednesday as lender HSBC plunged after it reported a shock $3 billion charge on its stake in a Chinese bank, while investors waited with bated breath for Wall Street darling Nvidia’s earnings.

HSBC Holdings dropped 8.4 per cent, its biggest one-day drop in nearly four years, despite record profit and chunky shareholder payouts, highlighting the challenge the Asia-focused bank faces as it grapples with China’s weaker than expected economic recovery.

HSBC’s slump drove a 5 per cent fall in the FTSE 350 banking index. The blue-chip FTSE 100 index slid 0.7 per cent, lagging major European peers, while the mid-cap FTSE 250 index closed up 0.1 per cent.

Close Brothers Group tumbled 8.4 per cent after Fitch downgraded the lender’s credit rating, citing expectations of weaker profitability and capitalisation in the medium term.

Glencore dipped 1.1 per cent after the Swiss-based commodity giant posted an earnings slump for last year due to lower commodity prices.

Europe

The pan-European Stoxx 600 index edged 0.2 per cent lower, bogged down by a 1.1 per cent decline in the banking index and a 0.8 per cent loss in healthcare stocks.

French vouchers company Edenred slipped 11.5 per cent after news that its Italian unit was being investigated by the public prosecutor’s office in Rome over an allegedly fraudulent public tender launched in 2019.

Fresenius Medical Care fell 5.5 per cent as analysts flagged a weak outlook for patient volumes from the German dialysis specialist.

Carrefour was among the top gainers, climbing 4.9 per cent after the retailer reported solid results and announced a 55 per cent dividend hike on Tuesday.

EFG International rose 1.5 per cent after the Swiss private bank reported a jump in net profit last year, marking a record profit for the lender, which has hired extensively from Credit Suisse following the bank’s collapse.

US

The tech-heavy Nasdaq led declines on Wall Street in the first hours of trading on Wednesday as investors braced for Nvidia’s high-stakes earnings report that could hinder this year’s AI euphoria if results are not stellar, and also awaited minutes from the Federal Reserve’s latest policy meeting.

Nvidia shed 1.9 per cent after a more than 4 per cent decline in the previous session ahead of the chip designer’s quarterly earnings, expected after markets close on Wednesday.

The company is expected to post a more than three-fold surge in its fourth-quarter revenue on robust demand for its chips that dominate the market for artificial intelligence (AI).

Palo Alto Networks slumped 26.5 per cent after the cybersecurity firm forecast third-quarter billings below analyst estimates. Shares of other cybersecurity companies also dropped.

Additional reporting: Reuters

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