Fed’s latest rate decision ahead

Semiconductor manufacturer Ams-Osram rose 5.8% to lead the Stoxx 600 on news that it has appointed Aldo Kamper, formerly of German cable and harness business Aldo, as its new CEO.

At the other end of the European benchmark, Hannover Rueck slipped further in afternoon deals, falling 5.1%, after reporting its full-year results.

— Karen Gilchrist

U.S. stocks fell in early deals Wednesday as investors looked ahead to the Federal Reserve’s interest rate decision.

The Dow Jones Industrial Average shed 234 points, or about 0.7%, at the open. S&P 500 was down nearly 0.3%. Meanwhile, the Nasdaq Composite was 0.2% lower.

— Karen Gilchrist

U.S. companies added fewer positions than expected in January, according to the ADP.

Private payrolls rose by 106,000 in January, lower than the 190,000 estimate from the Dow Jones, as well as the 235,000 reported for December.

— Sarah Min

Swiss drugmaker Novartis reported core operating income of $16.7 billion for 2022, broadly flat year-on-year.

It forecast growth in the mid single digits for 2023, when it is due to spin off its Sandoz generics business.

Novartis Chief Executive Vas Narasimhan told CNBC’s Geoff Cutmore the company had faced challenges in the first half of 2022 including hyperinflation and the ongoing impact of the coronavirus pandemic; but that these factors were stabilizing, providing tailwinds for the year ahead.

Narasimhan addressed the potential impact of the U.S. Inflation Reduction Act on medicines pricing, which he said could be offset in the near-term but would require a reconsideration of strategy in the longer term.

He also discussed pharma legislation in Europe, where he said governments needed to “rededicate themselves to health care,” and the European Commission should “create a more pro-innovation environment.”

Novartis shares were 2.26% lower in early afternoon trade.

— Jenni Reid

Spanish bank BBVA reported record profits for 2022, attributing the rise to a jump in lending income and a strong performance in Mexico.

The 6.42 billion euros ($6.98 billion) net profit for the full year was ahead of analyst expectations.

Chair Carlos Torres Vila told CNBC he now expects lower growth than 2022 “but still growth.”

BBVA shares traded 3.6% higher around midday London time.

— Jenni Reid

Inflation in the euro zone came in at 8.5% in January, according to preliminary data released Wednesday.

The 20-member region has gone through substantial price increases in 2022, after Russia’s invasion of Ukraine pushed up energy and food costs across the bloc. However, inflation started to ease in late 2022, showing two consecutive months of a reduction in headline levels. In December, the rate was recorded at 9.2%.

— Silvia Amaro

The U.S. Federal Reserve, European Central Bank and Bank of England are all expected to hike interest rates once again this week, as they make their first policy announcements of 2023.

Economists will be watching policymakers’ rhetoric closely for clues on the path of future rate hikes this year, as the three major central banks try to engineer a soft landing for their respective economies without allowing inflation to regain momentum.

The market is pricing in a 25 basis points hike from the Fed on Wednesday, but the key question is what the Federal Open Market Committee will indicate about further rate hikes in 2023.

Meanwhile 50 basis point hikes are expected from the ECB and BOE on Thursday.

Read the full story here.

— Elliott Smith

Swedish outdoor machinery seller Husqvarna was the top riser after the open, up 6.2%, despite reporting a higher operating loss for the fourth quarter. Adjusted for items including a restructuring the loss narrowed, however.

At the bottom of the Stoxx 600 index, U.K. defense firm QinetiQ shed 4.2%.

Germany reinsurer Hannover Rueck was down a similar amount after reporting higher full-year results that were in line with its previous forecast.

— Jenni Reid

Europe’s Stoxx 600 rose 0.3% in early trade, with travel stocks up 0.9% and financial services up 0.8%.

The U.K.’s FTSE 100 gained 0.25%, France’s CAC 40 was up 0.17% and Germany’s DAX rose 0.1%.

The start-of-year rally has stuttered, but European markets still managed to climb 6.72% through January.

Wednesday will be dominated by the Federal Reserve’s monetary policy announcement, where a 25 basis point increase is expected, as well as hints about its future path and assessment of the U.S. economy.

— Jenni Reid

European markets are heading for a higher open Wednesday as investors focus on the U.S. Federal Reserve’s latest monetary policy announcement today.

The U.K.’s FTSE 100 index is expected to open 10 points higher at 7,781, Germany’s DAX 30 points higher at 15,154, France’s CAC up 10 points at 7,096 and Italy’s FTSE MIB up 75 points at 26,721, according to data from IG.

Earnings come from Vodafone, GSK and Novartis. The main data release in Europe Wednesday is flash inflation figures from the euro zone for January.

— Holly Ellyatt

China’s factory activity in January signaled a further contraction from previous readings, albeit at a slower pace, marking the sixth monthly contraction in a row.

The Caixin manufacturing Purchasing Managers’ Index for January came in at 49.2 on Wednesday, a slightly higher reading than December’s 49.0 but still missing Reuters’ expectations of 49.5

“Both manufacturing supply and demand continued to shrink last month. Fallout from the pandemic was a drag on production and sales,” Caixin reported in the press release.

—Lee Ying Shan