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European stocks and the FTSE 100 were all trading higher on Wednesday morning ahead of the US Federal Reserve rate decision.
ADVERTISEMENTFrance’s CAC 40 rose slightly in early trade, while Germany’s Dax was up 0.2%. The FTSE 100 in London, meanwhile, was trading 0.2% higher.
Investors across the continent were positioning themselves ahead of the latest central bank decisions this week, starting with the US Federal Reserve on Wednesday evening – and from the Bank of England (BoE) and European Central Bank (ECB) on Thursday.
No change in rates from the BoE is expected from the current 5.25%, while the ECB is also set to keep rates unchanged at its current 4.5%.
“European markets have opened higher across the board. Entain is trading at the top of the FTSE 100 after its CEO stepped down. At the other end, B&M European Value Retail is at the bottom of the index, shedding around 6% after SSA Investments sold 2.8% of the company’s shares through a placing of shares at a discount of nearly 3%,” Victoria Scholar, head of investment at Interactive Investor, said.
Meanwhile, UK GDP fell by 0.3% in October, falling short of expectations for 0% growth, driven by weakness in the services sector with drops in IT, legal firms, and film production.
“The poor weather also contributed to weakness in manufacturing and construction. In the three months to October, GDP came in flat, also below forecasts for growth of 0.1% with increases in services offset by declines in manufacturing and housebuilding,” Scholar added.
US stocks gain ahead of latest rate announcement
Back in the US, on Tuesday, the S&P 500 climbed 0.5% to just below its all-time high set in early 2022 following a report showing inflation in the US is behaving pretty much as expected.
The Dow Jones Industrial Average added 0.5% and the Nasdaq composite rose 0.7%.
Big Tech stocks helped lead the way following solid gains for Nvidia, Meta Platforms and some other of Wall Street’s largest and most influential stocks. They overshadowed a 12.4% tumble for Oracle, whose revenue for the latest quarter fell short of analysts’ forecasts.
Wall Street’s spotlight was on the inflation report, which showed US consumers paid prices for gasoline, food and other living costs last month that were 3.1% higher overall than a year earlier. That was a slight deceleration from October’s 3.2% inflation and exactly in line with economists’ expectations.
The data likely changes nothing about what the Fed will do at its latest meeting on interest rates. The widespread expectation is still for the Fed to keep its main interest rate steady.
The Fed has already yanked its main interest rate from virtually zero early last year to more than 5.25%, its highest level since 2001. It’s hoping to slow the economy and hurt investment prices by exactly the right amount: enough to stamp out high inflation but not so much that it causes a steep recession.
In commodities, US crude gave up 43 cents to trade at $68.18 a barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, it lost $2.71 to settle at $68.61.
It had been above $93 in September but has been falling amid worries that global demand may fall short of available supplies.
Brent crude, the international standard, slipped 45 cents to $72.79 per barrel. It fell $2.79 on Tuesday to $73.24 per barrel.
In forex, the euro slipped to $1.0788 from $1.0793.
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