European Markets Close Lower As Investors Focus on Upcoming Fed Meeting

European markets closed lower on Monday as investors focused on the next U.S. Federal Reserve meeting, which begins on Tuesday. The two-day meeting will conclude with the central bank’s Federal Open Market Committee announcing its latest interest rate decision.

The Stoxx 600 index closed down 0.2% across Europe, with most sectors in negative territory. The tech sector led losses, down 1.7%, while food and beverage stocks ended 0.7% higher.

The Federal Reserve is expected to raise interest rates by one-quarter of a percentage point. Investors will be looking for clues about how much higher the central bank will take rates in the fight against inflation.

In the Asia-Pacific region, stocks traded mostly lower on Monday as shares of Adani Group remained volatile after the conglomerate rebutted short seller firm Hindenburg’s accusations of embezzlement and fraud.

U.S. stocks opened lower on Monday as investors prepared for a week of key corporate earnings reports and the possibility of an interest rate hike from the Federal Reserve.

U.S. stocks opened lower on Monday as investors looked ahead to the busiest week of earnings season and a possible interest rate hike from the Federal Reserve. The market is expecting a lot of news this week and investors are cautious about what the future may hold.

The Dow Jones Industrial Average slipped 83 points, or about 0.3%, in early deals. The S&P 500 dropped 0.6%, and the Nasdaq Composite fell by 1%.

Roy Jakobs, CEO of Philips, recently discussed the company's fourth quarter earnings and their strategy to improve supply chain shortages and overall profitability. Jakobs noted that they are working to improve their supply chain management in order to avoid future shortages, and that they are confident that their efforts will improve the company's bottom line.

JD Sports, a British fashion retail group, said on Monday that the personal and financial information of around 10 million customers may have been accessed in a cyber attack. This information was released in a statement from the London Stock Exchange.

The data at risk relates to historical orders placed between November 2018 and October 2020 with the chain’s JD, Size?, Millets, Blacks, Scotts and MilletSport brands. It includes clients’ names, billing addresses, delivery addresses, email addresses, phone numbers, order details and the final four digits of customer payment cards.

The company is advising its clients of the risk of fraud and phishing attacks, and is conducting an investigation in coordination with the UK’s Information Commissioner’s Office.

JD Sports shares fell slightly to $160.8 at 11:58 a.m. London time, down 0.50% from the previous close price.

Daniel Lacalle, chief economist at Tressis, says that inflation remains a major concern. He notes that core inflation is particularly high, and that this could lead to problems down the road.

Renault and Nissan have agreed to restructure their alliance, which will see Renault's shareholding in Nissan reduced from 43% to 15%. This move will help the two companies focus on their individual strengths and compete more effectively in the global marketplace.

The proposed deal would equalize the companies' cross-shareholdings, allowing each carmaker to "freely exercise the voting rights attached to their 15% direct shareholdings, with a 15% cap," the companies said. The deal is still pending board approval.

Under the new structure, Renault would transfer 28.4% of Nissan shares into a French trust.

Renault's stock price was down 1.6% at 10:40 a.m. London time.

Shares of British financial services group Legal & General dipped 2.5% after CEO Nigel Wilson announced he would be retiring after a decade in the role. Wilson has been with the company for over 30 years, and has been instrumental in its growth and success.

The company said that Wilson would stay in his current role until a successor is appointed, which is expected to take around a year.

It was noted that Wilson had delivered strong financial performance over a period of time, with total shareholder return exceeding 600%. This was attributed to significant growth in dividends, earnings per share, and ROE.

Legal & General shares have fallen by around 11% over the last year.

Computacenter, a British IT services company, was up 8.8% in early trade after announcing that it expects its results for 2022 to outperform guidance. However, the company did flag continuing inflationary pressure.

After announcing a range of measures to improve profitability, including 6,000 job cuts, Philips' stock rose by 5%.

CEO Roy Jakobs told CNBC that the cuts were a "necessary intervention to help us become competitive and lean in the way we go forward in the market."

At the bottom of European stocks, tech investment group Prosus dipped 5.5%. Last week, the company said it would shed around 30% of its workforce alongside its parent company as it looks to “strengthen cost structures.”

Europe's Stoxx 600 index opened lower on Monday, with all sectors in the red or flat. This follows a trend from last week, when the index closed lower for the fourth consecutive day.

Technology stocks were among the biggest losers on the day, with the sector down 1.6%. Travel stocks were also down, by 1.2%.

This week, all eyes are on central banks as they announce their next moves on interest rates. The Federal Reserve will announce its decision on Wednesday, followed by the Bank of England and European Central Bank on Thursday.

According to RBC Capital Markets’ Michael Tran, oil prices could approach $100 per barrel in the second half of the year. This would be a significant increase from the current prices, and could have a major impact on the global economy.

"China is going to be buying a lot of crude over the next several months," he said.

Brent crude futures were last traded at $86.85 a barrel, while U.S. West Texas Intermediate futures rose by 0.09% to $79.75 a barrel.

Investors and OPEC+ will be closely watching to see if the EU's embargo on Russian oil products, which goes into effect this Sunday, causes any major disruptions. The oil cartel is not expected to make any significant changes to their quotas or production guidance at an upcoming meeting, according to Tran's forecast.

Adani Enterprises shares rose 10% after seeing sharp losses in the previous sessions, with the company's Chief Financial Officer expressing confidence in its follow-on public offering, which is due to close on January 31.

The stock is still down more than 20% in the first month of the year. This is a significant drop, and it shows that investors are still cautious about the company's prospects.

Adani Ports and Special Economic Zone saw modest gains of 9% in India's first hour of trade. The company remains 23% lower year-to-date.

Adani Green Energy was very volatile and ended the day 10% lower. Adani Power also lost 5% and Adani Transmission lost 17%.

India's Nifty 50 Index traded higher on Monday, recovering from last week's rout of Adani shares. The index had hit three-month lows last week, but has since regained some ground.

According to Goldman Sachs, one corner of the tech sector may be seeing limited appetite from the market. However, the investment bank is optimistic about the sector as a whole.

The newsletter names stocks with near-term opportunity, as well as “offensive picks” it says can outperform their peers as the economy recovers.

European markets are set to open lower on Monday as investors turn their attention to the next U.S. Federal Reserve meeting. The two-day meeting will culminate in an announcement of the central bank's latest interest rate decision.

The FTSE 100 index is expected to open 13 points lower at 7,745, the DAX 22 points lower at 15,122, the CAC down 9 points at 7,083 and the FTSE MIB down 17 points at 26,339, according to data from IG.

Ryanair and Philips both reported earnings today. Spain also released preliminary inflation data for January.