European stocks fell on Wednesday as investors stayed on the sidelines awaiting a major interest rate decision by the U.S. Federal Reserve that could mark the start of a cycle of monetary easing in the world’s largest economy.
The pan-European STOXX 600 index fell 0.2 percent to 516.15 points, led by losses in healthcare stocks after reports that Novo Nordisk’s Ozempic is “very likely” to be one of the next drugs to be price cut in the United States.
Shares in the Danish pharmaceutical company fell 1.7 percent.
Technology stocks also dragged down the markets, falling 0.7 percent, while mining stocks fell 0.5 percent.
All major European markets were trading flat or lower.
Britain’s FTSE 100 index fell 0.3 percent after headline inflation in the U.K. came in at an annual rate of 2.2 percent in August, unchanged from July, but price growth in the services sector – closely watched by the Bank of England – picked up.
The day will be dominated by the expected start of monetary policy easing by the US central bank, whose interest rate decision is due at 1800 GMT. Money markets are pricing in a 63% chance of a 50 basis point cut, according to the CME FedWatch tool.
“Markets are currently expecting a 50 basis point cut from the Fed, and it is highly unlikely that the Fed will surprise investors with a 25 basis point cut. We expect the Fed to cut 50 basis points to get ahead of the bearish labor market data even as the fight against inflation appears to be over,” said Sonu Varghese, global macro strategist at Carson Group.
Investors will also be keeping a close eye on euro zone inflation data at 0900 GMT, while keeping a close eye on comments from European Central Bank supervisors Claudia Buch and Elizabeth McCaul later in the day.
Italy’s Campari fell 6.1 percent to bottom of the benchmark index after its chief executive Matteo Fantacchiotti unexpectedly resigned after just five months in charge.
Reckitt Benckiser rose 1.3 percent after reports the consumer goods giant had started early talks with potential suitors for the sale of its home care assets, which could be worth more than 6 billion pounds ($7.89 billion).
France’s Ubisoft Entertainment rose nearly 5 percent to top the STOXX 600 after BMO Capital Markets upgraded the stock to “outperform.”
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