Investing.com – European stocks traded mostly lower on Tuesday as investors continued to keep a watch on elections and developments with the U.K.’s plan to leave the European Union (EU), known as Brexit, while markets stay on hold as the U.S. Federal Reserve (Fed) kicks off its two-day policy meeting.
In mid-morning trade in Europe, the benchmark Euro Stoxx 50 fell 0.37%, France’s CAC 40 lost 0.30%, and Germany’s DAX 30 slipped 0.06%.
Markets were focused on developments surrounding Britain’s triggering Article 50 which will kick start negotiations between the U.K. and EU after British members of Parliament gave Prime Minister Theresa May approval Monday to move ahead with the process. The government has said that it will officially trigger Brexit by the end of this month.
The pound reacted to developments Tuesday with losses of around 0.6% against both the euro and the dollar, while a weaker pound helped support British stocks as foreign earnings become worth more when exchanged to sterling.
Political developments were also in focus in the Netherlands as the Dutch get set to go to the polls on Wednesday.
The elections are being watched as a bellwether for the spread of populism in Europe, particularly ahead of next month's French election, as well as those in Germany set for September.
Opinion polls have suggested that Dutch nationalist Geert Wilders' right-wing Freedom Party, which wants to take the Netherlands out of the European Union and stop Muslim immigration, has lost its lead to more mainstream opponents, although investors remained cautious over the possibility of a Brexit or Trump-style surprise outcome.
Markets also showed caution on Tuesday as the Fed will kick off its two-policy meeting with most expecting the U.S. central bank to hike rates for the third time since the financial crisis.
More than the move itself on Wednesday, investors will focus on the updated economic projections, including the dot plot that shows members’ expectations for future changes to interest rates, signs of a hawkish stance in the statement and, of course, Fed chair Janet Yellen’s follow-up press conference as they look to gauge to what degree the U.S. central bank may have become more aggressive with respect to monetary policy.
On the economic front, market players waited for the publication of the German economic sentiment for March, put out by the ZEW Institute.
Meanwhile, oil prices hovered near three-month lows on Tuesday, with investors waiting for key reports and data that may shed light on a supply overhang in the global market.
Energy stocks traded mixed, as French oil and gas major Total SA (PA:TOTF) fell 0.87% and Italy’s ENI (MI:ENI) lost 0.68%, but Norwegian rival Statoil (OL:STL) advanced 0.20%.
Financial stocks also showed mixed signs, as French lenders BNP Paribas (PA:BNPP) and Societe Generale (PA:SOGN) lost 0.75% and 0.55%, respectively, while Germany’s Deutsche Bank (DE:DBKGn) traded down 1.01%, but rival Commerzbank (DE:CBKG) gained 0.77%.
Among peripheral lenders, Italy’s Intesa Sanpaolo (MI:ISP) gave up 0.57% while Unicredit (MI:CRDI) edged forward 0.14%, while Spanish banks BBVA (MC:BBVA) and Banco Santander (MC:SAN) traded down 0.48% and 1.10%, respectively.
In London, the commodity-heavy FTSE 100 inched up 0.07%, supported by the weaker pound.
Shares in Glencore (LON:GLEN) lost 0.36%, Anglo American (LON:AAL) gained 0.46%, while BHP Billiton (LON:BLT) was unchanged and Rio Tinto (LON:RIO) fell 0.48%.
Energy stocks showed slight gains, as BP (LON:BP) inched up 0.02% and rival Royal Dutch Shell (LON:RDSa) edged forward 0.07%.
Financial stocks were broadly lower, with shares in HSBC Holdings (LON:HSBA) off 0.13% and the Royal Bank of Scotland (LON:RBS) down 1.99%, while Barclays (LON:BARC) and Lloyds Banking (LON:LLOY) lost 0.69% and 1.66% respectively.
In the U.S., futures pointed to a slightly lower open. The Dow Jones Industrial Average futures lost 0.14%, S&P 500 futures fell 0.12%, while the Nasdaq 100 futures slipped 0.09%.