European equities opened slightly lower on Tuesday as investors weighed the latest signals from ongoing U.S.-China trade negotiations. The pan-European Stoxx 600 index slipped 0.27% to 555.63 by 9:30 a.m. London time, with nearly every sector trading in negative territory. Major regional indexes were also down, including Germany’s DAX, which fell 0.52% to 23,625.04, and France’s CAC 40, which dipped 0.14% to 7,885.54.
Banking stocks led the declines, with the Euro Stoxx Banks index off 0.6% as traders awaited a key decision from the U.S. Federal Reserve. Among the hardest-hit were Germany’s Commerzbank and Spain’s Caixabank, both down 1.2%, alongside Bank of Ireland Group, which slipped 0.9%. The weaker performance underscores investor caution ahead of this week’s monetary policy announcements.
The Fed’s Federal Open Market Committee begins its two-day meeting on Tuesday, with money markets pricing in a 25-basis-point cut to the benchmark interest rate. The outcome could set the tone for global borrowing costs and risk appetite heading into the fourth quarter. European traders are also closely tracking any fresh guidance from the U.S. central bank on inflation and growth expectations.
In the United Kingdom, fresh labor market data painted a mixed picture. The unemployment rate held steady at 4.7% in July, its highest level in four years, while annual growth in average earnings excluding bonuses slowed to 4.8% in the three months to July from 5% previously. “The headline unemployment rate, which held steady, masks a cooling trend that will be unsettling for many workers,” noted Danni Hewson, head of financial analysis at AJ Bell, highlighting falling job openings and delayed recruitment ahead of November’s Autumn Budget.
On the geopolitical front, markets are monitoring U.S.-China talks in Madrid, where U.S. Treasury Secretary Scott Bessent met with Chinese Vice Premier He Lifeng over the weekend. President Donald Trump said negotiations were progressing well. The British pound traded 0.3% higher against the U.S. dollar at $1.363, while U.K. government borrowing costs edged up. The U.K. is also preparing for the U.S. president’s state visit, with meetings scheduled at Windsor Castle and 10 Downing Street later this week.
source: cnbc