PARIS: European equities ended lower on Tuesday as investors refrained from making big bets ahead of the European Central Bank’s policy meeting later this week, while advancing mining stocks helped limit losses.
The pan-European STOXX 600 index ended 0.3% lower, with utilities and rate-sensitive real estate stocks among top losers, down 0.8% and 1.3% respectively, while heavyweight healthcare stocks shed 0.9%.
On the bright side, base and precious metal miners added 2.0% as most base metal prices advanced, while copper prices were supported by hopes that top metals consumer China will unleash more stimulus to boost its economy.
China-exposed luxury firms including LVMH, Kering and Richemont were up between 1.1% and 1.7%.
Leading up to the ECB’s rate verdict, figures released on Tuesday showed euro zone consumer confidence fell by 1.0 point in January from the December number.
“We doubt the decline is the start of a new trend and expect a more sustained rebound soon, now that inflation of frequent-out-of-pocket purchases is declining sharply,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.
While a pause in interest rate hikes is nearly priced in for the upcoming ECB meeting, traders anticipate cuts of around 130 basis points this year, with a near 97% chance of the first reduction in June..
Spanish stocks lagged regional peers, falling 1.1%, bogged down by a 1.9% fall in Iberdrola as Barclays downgraded the utility’s stock to “equal-weight” from “overweight”.
As the earnings season picked up pace across the continent, LSEG I/B/E/S data showed fourth quarter earnings for STOXX 600 companies are expected to decline 8.8% from Q4 2022 versus a 7.1% drop expected last week.
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