Europe’s main stock benchmark was under pressure on Tuesday, finishing the session in the red, as investors battled political worries across three regions, with the outcome of U.S. midterm elections front and center for investors.
What are markets doing?
The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -3.64% slipped even further, closing down 0.9% at 7,040.68, while France’s CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -4.75% dipped to finish 0.5% down at 5,075.19.
Germany’s DAX 30 /zigman2/quotes/210597999/delayed DX:DAX -4.15% suffered a little less, ending down 0.1% at 11,484.34, and Italy’s FTSE MIB Italy index /zigman2/quotes/210598024/delayed IT:I945 -4.60% also finished 0.1% lower at 19,268.29.
In Southern Europe, Greece’s ASX Composite /zigman2/quotes/210597948/delayed GR:GD -4.45% bucked the trend with a gain of 1.8% to 629.84 at market close.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.9635% inched up to $1.1414, compared with $1.1408 late Monday, while the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.1276% rose to $1.3094 from $1.3042 late Monday.
What is driving the market?
Investors are closely watching the U.S. midterm elections, which are expected to drive financial markets on Wednesday. Gains or losses on Wall Street often also dictate the direction of global stock benchmarks.
Democrats are poised to wrest control of the House from Republicans who are tapped to keep their grip on the Senate. That split could make it tough on President Donald Trump’s legislative agenda.
U.K. stocks slipped as the pound continued its Brexit hope-inspired rise. Senior ministers expect to reach a deal with the European Union this month, according to a report by the BBC . Earlier, however, U.K. Trade Minister Liam Fox said it was impossible to say whether a deal would be agreed this year.
Elsewhere, Italy’s Finance Minister Giovanno Tria said Tuesday his government hadn’t changed its budget proposal that was rejected by Brussels last month, and denied news reports saying he was presenting a new draft. He said discussions would carry on despite disagreements between Brussels and Rome, according to Reuters .
Meanwhile data from the eurozone shows a narrow beat for composite and services PMIs for October, while the September producer-price index rose to 4.5% on the year, versus 4.3% expected.
What are strategists saying?
“No strongly directional move is expected before the U.S. midterm election; the market is likely to be less and less volatile for the rest of the day in Europe, until the results get released,” said Pierre Veyret, technical analyst ActivTrades.
Banks and drug stocks were among the main Europe stock index’s biggest losers, with HSBC Holdings PLC /zigman2/quotes/208272822/composite HSBC -6.21% /zigman2/quotes/203901799/delayed UK:HSBA -6.70% dropped to close 0.6% lower and Sanofi SA /zigman2/quotes/206928357/delayed FR:SAN -1.89% finished down 1.3%.
Siemens Gamesa Renewable Energy /zigman2/quotes/205820667/delayed ES:SGRE +3.54% was a top performer, with shares soaring 14.5% into the close after the manufacturer of wind turbines said it swung to a profit in the fourth quarter.
Shares of Wm Morrison Supermarkets PLC slid near 4% on Tuesday after the grocery chain posted sales results.