London’s FTSE 100 ended a volatile session higher on Tuesday as investors hedged with defensive stocks ahead of some keenly awaited events such as a U.S. Federal Reserve meeting and a decision on a U.S. stimulus plan.
Consumer .FTNMX3720 .FTNMX3530, real estate .FTUB8600 .FTNMX8670, healthcare .FTNMX4570 .FTNMX4530 and utility .FTNMX7530 stocks led gains, offsetting declines in material stocks .FTNMX1770.
The blue-chip FTSE 100 .FTSE closed up 0.4%, while the mid-cap FTSE 250 .FTMC added 0.7%.
Broader Europe traded mixed, while Wall Street fell as a $1 trillion (776.5 billion pounds) aid package announced by the U.S. Senate Republicans on Monday faced immediate opposition from both Democrats and some Republicans.
“The market is lacking one central narrative at the moment,” said Connor Campbell, markets analyst at SpreadEx. “It’s caught between last week’s news and anticipation for the big events this week.
“We’ll have to wait till at least tomorrow evening which is when the really juicy stuff comes about,” he said referring to the outcome of the Fed meeting. “A more accurate reflection of how the markets are feeling might be seen by the end of the week.”
The Fed is expected to reiterate its accommodative stance, with analysts also expecting it to lay the groundwork for more action later this year.
Massive global stimulus and hopes of an eventual COVID-19 vaccine have seen the FTSE 100 rally for the last three months, but it has struggled in July as surging coronavirus cases threaten a nascent economic recovery.
Among individual stocks, greeting card retailer Card Factory (CARDC.L) posted its best day in more than a month as sales at its stores since they reopened had exceeded expectations, while consumer products maker Reckitt Benckiser (RB.L) rose 1% on reporting better-than-expected quarterly results.
Despite posting a jump in sales, food-to-go retailer Greggs (GRG.L) slumped 6.2%, as investors fretted about the impact of social distancing on sales volumes at re-opened stores.
Mining majors BHP (BHPB.L) and Rio Tinto (RIO.L) slipp
European shares closed modestly higher on Tuesday, as investors assessed a batch of mixed earnings reports while holding out for more U.S. stimulus to limit the economic damage of COVID-19.
The pan-European STOXX 600 rose 0.4%, with defensive sectors such as healthcare .SXDP, food & beverage .SX3P and utilities .SX6P boosting the main index. Travel stocks .SXTP rebounded from losses on Monday when worries of a resurgence in coronavirus cases in Europe hit risk sentiment.
Investors awaited the conclusion of a U.S. Federal Reserve meeting on Wednesday, when policymakers are expected to reiterate their supportive stance as talks loom over another round of fiscal stimulus for the U.S. economy.
“Even if tomorrow is unlikely to be the right moment for a more expansionary monetary policy approach, the Fed will no doubt sound prepared for further easing,” Commerzbank analysts told clients in a note.
Earnings season also kicked into high gear in Europe, with luxury giant LVMH (LVMH.PA) sliding 4.1% as store closures sparked by the pandemic tore a hole into the Louis Vuitton owner’s second-quarter sales.
Gucci owner Kering (PRTP.PA) and France’s Hermes (HRMS.PA) slipped over 2%, while Moncler (MONC.MI), which makes luxury puffer jackets, shed 4.4% after reporting a first-half operating loss for the first time in its history.
Profits for companies listed on the STOXX 600 are expected to drop by a record 59% in the second quarter, according to Refinitiv data.
But with much of the decline priced in, European stocks are on course to end July with gains, supported by a European Union deal to jointly issue bonds to combat the economic fallout of the pandemic and hopes of a COVID-19 vaccine.
“Q2 will be the bottom of the earnings cycle most probably, and the expectations were quite gloomy and that’s why we are having some nice surprises on results,” said Michele Morganti, senior equity strategist at Generali Insurance Asset Management.
“The confidence in European assets can be sustained by the approval of the recovery fund.”
Peugeot maker PSA Group (PEUP.PA) rose 2.4% as it held on to its margin target despite a fall in profitability in the first half of 2020.
Online takeaway food company Delivery Hero SE (DHER.DE) jumped 2.4% after it raised its forecast for 2020 sales after nearly doubling quarterly revenues.
British housebuilders .FTNMX3720 jumped 2% after a report that the UK government is drawing up extension to its Help to Buy scheme, which makes it easier for first-time buyers to afford a home.