European Stocks Drop Before Fed Rate Decision; Novo Nordisk Dips

European stocks fell as attention turned to the Federal Reserve’s highly anticipated interest-rate decision and any signals on its policy outlook. Novo Nordisk A/S shares slipped on worries that Ozempic could be targeted for a US price cut.

(Bloomberg) — European stocks fell as attention turned to the Federal Reserve’s highly anticipated interest-rate decision and any signals on its policy outlook. Novo Nordisk A/S shares slipped on worries that Ozempic could be targeted for a US price cut.

The Stoxx Europe 600 Index dropped 0.5% by the close in London. Consumer products and media stocks lagged, while autos and energy outperformed.

Novo Nordisk fell as it said its blockbuster diabetes shot Ozempic was “very likely” to be one of the next drugs targeted for a price cut in bargaining with the US government’s Medicare program. Davide Campari-Milano NV slid after Matteo Fantacchiotti resigned as chief executive officer, while shares in Ubisoft Entertainment SA rose after an analyst upgrade.

Europe’s benchmark gauge has had a volatile recovery from the summer selloff, as the prospect of rate cuts hasn’t fully tempered signs of an economic slowdown. The index still stands about 2% below its August record high. 

After the European Central Bank reduced rates last week, the focus Wednesday is on the Fed’s policy meeting, where officials are expected to lower rates for the first time in four years. Traders are split between wagers on a 25- and 50-basis point reduction, according to swaps data.

“We remain bullish on stocks in 2025, but the rally is looking increasingly fragile,” said Panmure Liberum strategist Susana Cruz. “Current rate-cut expectations have overshot and sentiment is very volatile.” She added that she preferred UK stocks to Europe and the US.

A recent survey from Bank of America Corp. showed investor confidence in European equities is ebbing on worries about a weaker economy. The region’s so-called cyclical stocks — which are more sensitive to economic growth — have underperformed defensive peers for most of this quarter.

Barclays Plc strategists said cyclicals “should stabilize” and that the bulk of the rally in defensives may be over if economic data hold up.

All eyes Thursday will be on the Bank of England’s policy decision, with the central bank expected to hold interest rates steady. The FTSE 100 fell 0.7% on Wednesday.

For more on equity markets:

• BofA Sees Investors Becoming Increasingly Bearish: Taking Stock
• M&A Watch Europe: L&G; Reckitt; Generali; Continental
• EFG Hermes Says Gulf Investors Turn Picky After Rush: ECM Watch
• US Stock Futures Unchanged; Intuitive Machines Gains
• Worth a Flutter?: The London Rush

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—With assistance from Michael Msika.