Markets wrap: European stocks higher ahead of Fed rate decision

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European stocks and the FTSE 100 were all trading higher on Wednesday morning ahead of the US Federal Reserve’s rate decision.

ANNOUNCEMENT

The French CAC 40 rose slightly in early trading, while the German Dax rose 0.2%. London’s FTSE 100, meanwhile, was trading 0.2% higher.

Investors across the continent are positioning themselves for the latest central bank decisions this week, starting with the US Federal Reserve on Wednesday evening – and the Bank of England (BoE) and European Central Bank (ECB) on Thursday.

The BoE is not expected to change rates from the current 5.25%, while the ECB is also set to keep rates unchanged at the current 4.5%.

“European markets opened higher across the board. Entain is listed at the top of the FTSE 100 following the resignation of its CEO. At the other end of the spectrum, B&M European Value Retail sits at the bottom of the index, losing around 6% after SSA Investments sold 2.8% of the company’s shares through a share placing at a discount of almost 3% ,” Victoria Scholar, chief investment officer at Interactive Investor, said.

Meanwhile, UK GDP fell 0.3% in October, below expectations for 0% growth, led by weakness in the services sector with declines in IT, law firms and film production .

“The bad weather also contributed to weakness in the manufacturing and construction sectors. In the three months to October, GDP remained flat, even below growth forecasts of 0.1%, with increases in services offset by declines manufacturing and housing sectors,” added Scholar.

US stocks gain ahead of latest rate announcement

Back in the U.S., on Tuesday, the S&P 500 rose 0.5% just below its all-time high set in early 2022 following a report showing that U.S. inflation is performing more or less as expected.

The Dow Jones Industrial Average gained 0.5% and the Nasdaq composite rose 0.7%.

Big Tech stocks helped lead the way after solid gains from Nvidia, Meta Platforms and some of Wall Street’s other largest and most influential stocks. They overshadowed the 12.4% slump of Oracle, whose revenue for the latest quarter fell short of analysts’ forecasts.

Wall Street’s spotlight was on the inflation report, which showed that U.S. consumers last month paid prices for gasoline, food and other living costs that were overall 3.1% higher than a year earlier. This was a slight slowdown compared to October’s 3.2% inflation and exactly in line with economists’ expectations.

The data probably doesn’t change anything about what the Fed will do in its latest interest rate meeting. The widespread expectation is still that the Fed will keep its main interest rate stable.

The Fed has already lowered its main interest rate from virtually zero early last year to above 5.25%, the highest level since 2001. It hopes to slow the economy and hit investment prices in exactly the right amount : Enough to eliminate high inflation but not enough to cause a major recession.

As for raw materials, American crude oil lost 43 cents to trade at 68.18 dollars a barrel in electronic trading on the New York Mercantile Exchange. It lost $2.71 on Tuesday to settle at $68.61.

It was above $93 in September, but has been falling due to concerns that global demand may fall short of available supplies.

Brent crude, the international standard, slipped 45 cents to $72.79 a barrel. It fell $2.79 to $73.24 a barrel on Tuesday.

In forex, the euro slipped to $1.0788 from $1.0793.

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