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(Alliance News) - Blue-chip European equities closed in the red on Wednesday, with poor manufacturing data and fading hopes of an end to zero-Covid measures in China doing little to lift the mood ahead of a Federal Reserve interest rate decision.
The FTSE 100 index closed down 42.02 points, 0.6%, at 7,144.14. The FTSE 250 ended up 21.85 points, 0.1%, at 18,217.75, while the AIM All-Share lost 2.52 points, 0.3%, at 812.02.
The Cboe UK 100 closed down 0.5% at 714.48, the Cboe UK 250 ended up 0.1% at 15,636.59, and the Cboe Small Companies ended up 0.7% at 12,409.89.
In European equities on Tuesday, the CAC 40 in Paris ended down 0.8%, while the DAX 40 in Frankfurt lost 0.6%.
Stocks in New York were also weaker. The Dow Jones Industrial Average was down 0.3%, the S&P 500 down 0.7% and the Nasdaq Composite shed 1.2%.
Monetary policymakers in both the US and UK are expected to hike rates by 75 basis points on Wednesday evening and Thursday afternoon, respectively, though all eyes will be on the forward guidance issued after the decisions.
Stock markets investors are hoping that the Fed lays the groundwork for a pivot when it meets next month. Some analysts, meanwhile, believe the BoE may surprise and actually hike by just 50 basis points on Thursday.
The latest Fed rate decision is given at 1800 GMT on Wednesday, followed by a press conference with Chair Jerome Powell at 1830 GMT.
The BoE announces its latest interest rate decision at 1200 GMT, with a press conference following half an hour later.
Sterling was quoted at USD1.1456 late on Wednesday, down from USD1.1465 at the London equities close on Tuesday.
IG analyst Chris Beauchamp commented: "For sterling watchers the problem of what to do next is compounded by the fact that Andrew Bailey and co will follow hard on the heels of Jerome Powell and his team. Now that the crisis at the heart of government has subsided, the focus returns to the UK economy, and here there is probably little that the BoE can say to chivvy the pound higher against the dollar from here. Even the adventurous types that bought the pound at its September lows might shrink from chasing the rally any higher from here."
Against the yen, the dollar was quoted at JPY147.08, down versus JPY148.07. The euro traded at USD0.9865, down from USD0.9873.
Manufacturing in the eurozone slid further into contraction in October as demand plummeted, according to figures on Wednesday.
The latest S&P Global eurozone manufacturing purchasing managers' index fell to 46.4 points in October from 48.4 in September. The reading was a 29-month low, and worse than the previous 46.6 flash estimate.
Falling further below the 50.0 no-change mark shows that the contraction in the sector has deepened.
On the London Stock Exchange, Next added 1.7%.
In the 13 weeks to October 29, full-price sales including interest income were up 0.4% from a year prior, slightly ahead of the company's expectations. Total product full-price sales fell by 0.1%.
Looking ahead, Next said its full-year guidance remains unchanged. It expects full price sales for the rest of the year to be down 2%, and profit before tax of GBP840 million, a 2.1% increase on last year's GBP823.1 million.
Shares in mining stocks weakened on Wednesday, as hope that China was considering an end to the economically-damaging zero-Covid policies faded.
Antofagasta lost 4.7% and Anglo American fell 3.1%.
Chinese authorities imposed lockdowns on 600,000 people in the area surrounding the world's largest iPhone factory on Wednesday after workers fled to avoid a coronavirus outbreak and the resulting restrictions.
Everyone except Covid-prevention volunteers and essential workers "must not leave their residences except to receive Covid tests and emergency medical treatment", officials from central China's Zhengzhou Airport Economy Zone said.
The move comes after unconfirmed posts on Chinese social media saying officials were putting together a committee to discuss how to move the country away from its zero-Covid policy.
Back in London, British American Tobacco dropped 5.3% as Goldman Sachs cut the Dunhill cigarette maker to 'neutral' from 'buy'.
Also on the receiving end of a recommendation cut, boohoo slid 9.5%. Liberum cut the online-only retail company to 'sell' from 'hold'.
Hiscox added 6.0%. The insurer said gross premiums written grew in the first nine months of 2022.
The Hamilton, Bermuda-based firm said total gross premiums written rose 6.3% to USD3.68 billion from USD3.46 billion a year ago.
Aston Martin plunged 15%, as it warned on costs and trimmed annual guidance.
The carmaker said it had incurred incremental costs trying to mitigate new supply chain and logistical disruption issues over the quarter, adding that while it has now identified resolutions to these problems, it does not expect to see cash inflows from more normal capital dynamics until next year.
Despite a 3.0% increase in total wholesale volumes to 1,384 from 1,349 for the third quarter, Aston Martin now expects full-year growth in the range of 6,200 to 6,600 units, revised from a target of over 6,600 units.
Elsewhere in London, Metro Bank advanced 13%. It said it was profitable in September, ahead of previous guidance.
The London-based retail and commercial bank said September's performance was driven by "assertive" balance sheet action, strong net interest margin expansion, and continued cost discipline.
Net interest margin expanded to 1.98% in the third quarter of 2022, from 1.81% the previous quarter.
Gold was quoted at USD1,646.74 an ounce at the London equities close on Wednesday, higher than USD1,644.63 late Tuesday. Brent oil was trading at USD96.32 a barrel, up from USD94.48.
After the Fed's interest rate decision at 1800 GMT, there will be quarterly results from online auction website eBay and semiconductor firm Qualcomm after the closing bell in New York on Wednesday.
Thursday's economic calendar has an eurozone unemployment reading at 1000 GMT and a services PMI reading from China overnight. A UK services PMI release is due at 0930 GMT, ahead of the BoE decision at midday.
The local corporate calendar has half-year results from telecommunications firm BT, transport ticket booking platform Trainline and grocer Sainsbury's.
By Eric Cunha; ericcunha@alliancenews.com
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