European stocks traded lower on Wednesday amid concern over U.S.-China trade talks and escalating unrest in Hong Kong, while investors await comments from U.S. Federal Reserve Chairman Jerome Powell.
The pan-European Stoxx 600 was down 0.7% during morning trade, with bank stocks falling 2.1% to lead losses while the food and beverages sector bucked the trend to climb 0.7%.
U.S. President Donald Trump on Tuesday claimed that the initial phase of a trade deal between the world’s two largest economies would be completed “soon” but offered no new details while branding China “cheaters.”
Powell is due to address the state of the American economy in Congress at the start of two days of hearings following the Fed’s third interest rate cut this year.
Back in Europe, ECB data showed that banks in Italy and other peripheral euro zone economies are capitalizing on the central bank’s bonus rate to seize tens of billions of euros from northern European rivals in Germany and the Netherlands, Reuters reported on Tuesday.
Official data published Wednesday showed that U.K. inflation dipped to its lowest level in almost three years in October, with consumer prices rising at an annual rate of 1.5%, down from 1.7% in September and lower than the 1.6% forecast in a Reuters poll.
Official estimates also indicated that euro zone industrial production exceeded expectations to increase for the second consecutive month in September, rising 0.1% as output from France and the Netherlands offset declines in Germany and Italy.
Stocks on the move
Corporate earnings will continue to affect individual stock prices, with Dutch bank ABN Amro reporting a 24% drop in third-quarter net profit before the bell, leading shares 5.3% lower.
Dan Scott, deputy CIO of Vontobel, told CNBC’s “Street Signs” that the banking stock woes were most likely tied to negative rates ahead of Powell’s testimony.
“In the rates perspective, it was clear already from Jackson Hole that the Fed is open to the fact that it can’t set rates in isolation, i.e. when Europe is in negative territory, when Japan is in negative territory, the Fed can’t have such a high policy rate,” Scott said.
“It was clear that this rate cut we just saw, the last 25 basis points, had to come, and now it’s up for debate whether we get another 25 basis points before year end,” he added, while contending that the U.S. does not need another rate cut before 2020.
Meanwhile, Danish medical technology supplier Ambu soared 22% after chairman Jens Bager resigned and the company proposed Lars Rasmussen as its new chairman.
There were some substantial losers during the morning session, with shares of Swedish investment company Kinnevik plummeting 20% while Tullow Oil also plunged more than 20% after cutting its 2019 oil production guidance.
Satellite operator SES saw its shares fall 12.5% amid uncertainty around a pending auction of its C-band spectrum, which caused J.P. Morgan to downgrade the stock to “neutral” from “overweight” Wednesday morning.