Europe: Stocks slip; commodity, defence rallies offset by luxury losses

EUROPEAN stocks slipped on Wednesday as commodity and defence rallies faced resistance from heavyweight healthcare and luxury names, with investors parsing fresh signals from Federal Reserve Chair Jerome Powell.

The pan-European Stoxx 600 closed 0.19 per cent lower at 553.88, while regional bourses were mixed. The French benchmark led losses, down 0.6 per cent. The basic resource sector jumped 1.8 per cent as copper prices rose to a 15-month high, while crude prices hit a three-week high, pushing the energy sector up 1.5 per cent.

Anglo American surged 4.7 per cent after Endiama bid for a minority stake in the miner’s diamond unit De Beers.

Defence stocks, including Rheinmetall, Hensoldt and SAAB, rose between 3 per cent and 8 per cent after US President Donald Trump said he believed Ukraine could retake all its land occupied by Russia and that Kyiv should act now.

Losses in heavyweight luxury stocks such as LVMH, Hermes, Richemont and EssilorLuxottica kept Stoxx 600 gains in check. The subindex for luxury stocks dropped 1.5 per cent.

Meanwhile, healthcare stocks slipped 0.6 per cent, with heavyweights AstraZeneca and Roche down 2 per cent and 0.4 per cent respectively.

Automobile stocks pared losses and closed 0.6 per cent lower after Bloomberg News reported that Washington formalised lower auto tariffs, effective from Aug 1.

Wall Street stocks also stumbled as investors combed through Powell’s latest remarks, which offered little clarity on the Fed’s path ahead for interest rates.

Traders are betting on at least one more rate cut this year, with odds of an October move topping 94 per cent, according to the CME FedWatch Tool.

SEE ALSO

The Fed’s first rate cut of 2025 last week lit a fire under global assets, lifting European and US equities. But after a strong start to the year – fueled by gains in defense stocks – European shares have lost momentum, trailing their US peers amid a relentless artificial-intelligence-driven rally that has pushed American benchmarks to record highs.

“The risk is the Fed turns more dovish by the time of the December meeting because restrictive monetary policy can worsen the employment backdrop and upside risks to inflation are not materialising,” said Elias Haddad, senior markets strategist at Brown Brothers Harriman.

The Stoxx 600 sits about 2 per cent shy of its March peak, up about 9.2 per cent year-to-date. Meanwhile, the S&P 500 has risen close to 13 per cent.

Lanxess fell 6.6 per cent after Deutsche Bank downgraded the German chemical company’s stock to “hold” from “buy”. A survey of German business morale showed an unexpected decline in September as the economic outlook remained weak. REUTERS