European shares muted on Russian mobilization, looming Fed decision According to Reuters

© Reuters. German stock price index DAX chart illustrated at the stock exchange in Frankfurt, Germany, September 20, 2022. REUTERS/Staff

By Shreyashi Sanyal and Johann M Cherian

(Reuters) – European shares traded in a tight range on Wednesday as investors pored over the first Russian deposit since World War Two as they awaited a second straight rate hike. three are likely to be from the US Federal Reserve later in the day.

The continent-wide index was 0.1% higher, rebounding after hitting its lowest level since early July.

The tech-sensitive index fell 0.7%, offset by gains in energy and mining stocks. Indices rose about 1.5% each as prices of oil and other commodities rose following the mobilization news. [O/R] [MET/L]

Defense stocks rose to some extent as well. Rheinmetall, Leonardo, Thales and BAE Systems (OTC:) increased from 5.1% to 7.0%.

President Vladimir Putin has ordered the mobilization of part of Russia’s 2 million-strong military reserve, amid a dramatic escalation of the conflict in Ukraine.

The mobilization has raised fears of a conflict that increases the possibility of a division of power and the possibility of a winter blackout after Russia abruptly turned off a faucet on a key pipeline to the region.

The index recorded the biggest drop among its continental peers, down 0.5%, as Europe’s economic powerhouse depends on Russia for its energy supply.

Highlighting that dependence, Germany confirmed the nationalization of Uniper, the country’s largest importer of Russian gas, as it scrambled to secure non-Russian energy sources. The company’s shares fell about 19%.

“The volatility in prices will also have an impact on the manufacturing industry, especially in Germany because of concerns about possible power outs and energy constraints, which could also cause damage,” said Susannah Streeter. damage and weaken already fragile economies. , senior investment and market analyst at Hargreaves Lansdown.

The Fed is said to have raised its benchmark lending rate by 75 basis points (bps) at the end of the day, continuing its aggressive fight against persistently high inflation. Some traders also expect the US central bank to raise rates entirely by percentage points. [FEDWATCH]

“The 75bps rally is priced in at this stage but where does it get interesting, what will the final rate be?” said Giles Coghlan, head of market analysis at HYCM.

“The market wants to see if the Fed is saying we’re actually in a tougher situation than we thought, so we’re going to have to be more aggressive than you might expect.”

Fortum shares jumped 14.6% to the top of the STOXX 600, after Germany agreed to nationalize Uniper by buying a stake in the Finnish company.

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