European stocks mostly lower ahead of Fed meeting; HSBC takes major legal hit

Investing.com - European stocks traded in a subdued manner Tuesday, with traders digesting a swathe of major corporate earnings ahead of an eagerly-awaited policy meeting by the Federal Reserve.

The DAX index in Germany slipped 0.1% and the CAC 40 in France dropped 0.3%, while the FTSE 100 in the U.K. rose 0.5%. 

Fed starts key policy meeting  

The big event of a busy week is the Federal Reserve’s two-day policy-setting meeting, starting later in the session. 

The U.S. central bank is widely expected to announce a cut to interest rates at the conclusion of this meeting, on Wednesday, especially after data released at the end of last week showed the annual U.S. inflation rate hitting a lower-than-expected 3% in September.

The market is now pricing in a 96% chance of a 25 basis-point rate cut this week, according to the CME Fedwatch tool.

Investors are also looking for a signal from Fed Chair Jerome Powell that policymakers will also ease monetary policy at its final meeting of the year in December, given concerns about a weakening labor market.

The Fed isn’t the only major central bank holding a meeting this week, with the Bank of Japan, the Bank of Canada and the European Central Bank also active.

The ECB is widely expected to keep its policy rates unchanged given inflation remains around its 2% medium term target and economic growth seems stable.

That said, consumer sentiment in Germany is expected to deteriorate further heading into November, as the GfK consumer sentiment index fell to -24.1 points for November from a downwardly revised -22.5 points in October.

Globe trade in spotlight 

Global trade is also at the forefront of investors’ thinking, with U.S. President Donald Trump set to meet Chinese President Xi Jinping in South Korea on Thursday, with the two leaders expected to finalize details of a trade deal. 

Market sentiment has been underpinned by optimism over U.S.-China trade progress after negotiators in Kuala Lumpur finalized a draft framework to avert new tariffs.

Trump met Japan’s newly appointed Prime Minister Sanae Takaichi in Tokyo on Monday, where the two discussed defense cooperation, trade, and a $550 billion U.S. investment package announced earlier this year.

HSBC takes hefty legal hit 

There are more major corporate earnings to digest in Europe Tuesday as the quarterly results season continues.

HSBC Holdings (LON:HSBA) reported a 14% decline in third-quarter pretax profit, hurt by a $1.1 billion legal provision, but the bank also upgraded its income forecast for the year, reflecting the view that rate cuts in key markets such as Hong Kong and Britain will be slower than initially thought.

BNP Paribas ’s (EPA:BNPP) third-quarter profit rose 6.1%, supported by strong trading gains and the first contribution from AXA Investment Managers, keeping the French banking group on track to exceed its full-year earnings target.

Swiss drugmaker Novartis (SIX:NOVN) reported higher third-quarter sales and earnings and reaffirmed its full-year outlook, supported by growth in key prescription medicines and progress in late-stage research programs.

Amundi’s (EPA:AMUN) third-quarter 2025 profit before tax rose above expectations, but the French asset manager said its upcoming 2028 strategic plan will reflect uncertainty surrounding the expiry of its distribution agreement with UniCredit in June 2027.

Anglo American (LON:AAL) reiterated its full-year guidance after the miner reported a mixed third quarter, with resilient copper output, lower iron ore volumes and a strong recovery in manganese and diamonds.

Capgemini (EPA:CAPP) raised its full-year 2025 growth outlook after the French consulting group reported a better-than-expected third quarter, supported by rising demand in North America and continued expansion in cloud, data and artificial intelligence services.

Crude slips on OPEC+ report 

Oil prices retreated on Tuesday, weighed by a report of more planned output increases by a group of major producers. 

Brent futures dropped 1.8% to $63.76 a barrel, and U.S. West Texas Intermediate crude futures fell 2% to $60.09 a barrel.

Bloomberg reported late Monday that the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, is considering increasing oil production in December this coming Sunday.

Bloomberg reported the group is looking at a third monthly production hike of 137,000 barrels a day, with the cartel seeking to reclaim a greater share of the oil market in order to offset the impact of prolonged weakness in oil prices.