European markets slip as central bank meetings dominate; FTSE 100 hit by commodity stocks

European markets started Tuesday on a weak note, with the pan-European Stoxx 600 index slipping 0.4% as all sectors and major bourses opened in negative territory.

A pivotal week for global monetary policy is underway, with the US Federal Reserve, Bank of England, and other central banks set to deliver their decisions.

The US Federal Reserve’s final two-day policy meeting of the year began on Tuesday, with the announcement of its monetary policy decision expected on December 18.

According to CME Group’s FedWatch tool, traders are pricing in a 95% likelihood of a quarter-point rate cut.

Market participants will closely monitor Fed Chair Jerome Powell’s post-meeting press conference for insights into future policy moves.

Meanwhile, the Bank of England (BoE) is set to meet on Thursday.

While the market is largely not expecting any rate changes, a slim possibility of a final rate cut remains on the table.

Commodity stocks drag FTSE 100 lower

London’s FTSE 100 index was down 0.8%, losing 62.71 points to 8,199.34 as commodity-focused stocks weighed on the index.

Shares in Shell fell 44.5p to 2,414p, BP dropped 5.65p to 379.45p, and Glencore slipped 4.7p to 363.05p.

Blue-chip companies AstraZeneca and BAE Systems also faced declines, falling by 140p to 10,384p and 13.5p to 1,183.5p, respectively.

Distribution and services firm Bunzl led the list of fallers, dropping 5% or 176p to 3,382p after warning that persistent deflation would slightly impact its operating profit in 2024.

In contrast, the London Stock Exchange Group rose 70p to 11,585p following an upgrade from UBS, which rated the stock as a “Buy” with a target price of 13,500p.

Hollywood Bowl shares tumble 11%

The FTSE 250 index also opened lower, shedding 103.34 points to 20,709.69.

Among the laggards, Hollywood Bowl shares tumbled 11% or 36p to 297.5p following its annual results announcement.

The ten-pin bowling operator reported a 7.1% rise in revenues to a record £230.4 million for the year ending September 30.

However, adjusted profits fell by 5.2% to £45 million, partly due to rising National Insurance costs for employers.

The company warned that changes introduced in the UK government’s recent budget would increase its annual costs by £1.2 million starting in April.

Despite these challenges, CEO Stephen Burns remained optimistic about the company’s long-term growth, with plans to expand its estate from 85 centers to 130 by 2035.

Four new sites are expected to open in the UK and at least two in Canada in the current financial year.

Bunzl falls 5%

Distribution and services company Bunzl also faced investor scrutiny after stating that persistent deflation would have a slight impact on its adjusted operating profit in 2024.

Shares fell 5% or 178p to 3,380p after the update.

Despite the near-term challenges, CEO Frank van Zanten highlighted robust revenue growth, driven by acquisitions and underlying performance.

He expects strong progress in operating profit and margin expansion compared to 2023.

Looking ahead, Bunzl remains optimistic about growth prospects in 2025, supported by acquisitions and steady demand for its essential products and services.

Meanwhile, political uncertainty in Germany has added to market jitters.

Chancellor Olaf Scholz lost a confidence vote in parliament on Monday, setting the stage for snap elections on February 23.

This move follows the collapse of his coalition government last month.

Economic data releases on Tuesday include UK unemployment figures and Germany’s Ifo business climate and economic sentiment indices, offering fresh insights into the health of two of Europe’s largest economies.

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