European Stoxx 600 falls 0.16% as investors await Fed and tech earnings

Key Facts

The move came after the index ended the previous session up 0.47%, reflecting market caution as monetary policy and corporate earnings crowded the agenda. The Federal Reserve's Federal Open Market Committee meeting was being held on October 27 and 28, with the Fed scheduled to hold a press conference on October 28. Investors expected the Fed to leave interest rates unchanged after raising them at its September meeting, while the possibility of another increase in December remained in Wall Street forecasts. Markets are watching the decision for signals about the path of interest rates at year-end.

The decline was not evenly spread across sectors and stocks. European technology shares rose 0.3% as optimism about artificial intelligence returned, ahead of Alphabet and Microsoft reporting after the U.S. market close on Wednesday. Investors are watching whether heavy spending on AI will translate into future growth, and whether returns will justify the cost of building these capabilities. Reuters said investors were looking for “evidence of returns that justify the high cost of expanding in AI.” Microsoft said results for the first quarter of its fiscal year 2027 would be released on October 28. The earnings date thus coincided with the Fed meeting, adding a range of closely watched catalysts to the trading day.

In the banking sector, Deutsche Bank shares rose 3.5% after it reported a 2% increase in third-quarter profit, beating analysts' estimates. By contrast, Santander shares fell 2.9%, leading Spain's index to decline 1%. The moves showed how European stocks responded differently to corporate results: Deutsche Bank's results supported its shares, while Santander's performance weighed on the Spanish market. At the sector level, energy rose 0.4% as oil prices climbed more than 2%. Reuters said higher oil prices weakened risk appetite ahead of the European Central Bank decision scheduled for Thursday.

Oil's rise comes as security developments in the region are being monitored, but the claim concerning Ras Tanura refinery has not been verified. The Houthis said on social media that they had targeted the refinery in the Eastern Province with a ballistic missile, while the Associated Press reported that it could not verify the claim and that Saudi Arabia had not commented on it. Saudi authorities had said they intercepted and destroyed two ballistic missiles launched toward Riyadh and three missiles launched toward the Eastern Province. These developments have put regional risks in focus for energy markets, though available sources do not establish a link between the refinery targeting claim and oil price movements. Prices rose more than 2% during Wednesday trading, according to Reuters.

After the Fed decision, attention will turn to U.S. inflation and growth data. The Associated Press forecast that the personal consumption expenditures index would rise 3.7% in September, compared with a 3.4% increase in August; the index is the Fed's preferred measure of inflation, and the central bank targets inflation of 2%. The price trajectory gives policymakers an important reading as investors await the interest rate decision and signals about December. The U.S. Bureau of Economic Analysis also scheduled the release of its advance estimate of third-quarter gross domestic product for October 29 at 8:30 a.m. These dates keep upcoming economic data at the forefront of market attention after central bank meetings and corporate results.

In Europe, the European Central Bank will announce its monetary policy decisions on Thursday, October 29, at 14:15 Central European Time, followed by a press conference at 14:45. The decision comes after monetary policy meetings began on Wednesday and a session in which the European index fell as oil prices rose. Markets will watch the bank's decision and press conference alongside corporate results and U.S. data scheduled for the same day. Alphabet and Microsoft results remain a major event for investors assessing the returns on AI investments. The U.S. GDP estimate is scheduled for release before the European Central Bank press conference that day.