European shares cautious ahead of US Fed policy decision

European shares gave up opening gains on Wednesday, as caution crept in ahead of the U.S. Federal Reserve’s policy decision, but strong results from Deutsche Bank and Lloyds Banking Group boosted earnings optimism.

MSCI’s broadest index of world shares was sidestepping towards its best month of the year so far as Europe’s bourses struggled to hang on to some modest early gains and S&P 500 futures went flat.

The pan-European STOXX 600 index slipped 0.3%, with travel and leisure stocks easing from all-time highs, and miners retreating after a recent rally. The region’s banking sector was up 0.3% and insurers rose 0.6%.

Deutsche Bank jumped 6.5% to the top of STOXX 600, as strength at its investment bank helped the German bank post a better-than-expected firstquarter net profit. Topping London’s FTSE 100, Lloyds Banking Group rose 3.3% after reporting a better-thanexpected profit. Sweden’s SEB and Spain’s Santander inched lower after their quarterly results.

Investors, however, stayed away from making big bets ahead of the U.S. central bank’s policy announcement due at 1800 GMT. Policymakers are widely expected to reaffirm their stance to keep monetary policy loose until enough economic progress has been made.

Earnings at European companies in the first quarter of 2021 are expected to surge 71.3% from a year earlier, according to Refinitiv IBES data, up from last week’s forecast of a 61.2% jump.

The world’s biggest advertising company WPP rose 2.9% on returning to underlying growth in the first quarter, as clients launched new products and brands.

In commodities, Brent crude futures fell a touch to $66.40 a barrel, while U.S. West Texas Intermediate crude lost 0.03% to $62.92 per barrel due to worries about energy demand.

Benchmark copper edged back from a decade high of $9,965 a tonne hit on Tuesday due to some concerns about a possible softening of demand in China, the world’s top consumer of the metal.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.