European Shares Set For Cautious Start Ahead Of Fed Decision

European Shares Set For Cautious Start Ahead Of Fed Decision

December 19, 2023

European stocks may open broadly lower on Wednesday as investors await the Federal Reserve’s rate announcement later in the day.

The U.S. Labour Department’s report on producer price inflation may also attract attention after the November CPI report pointed to sticky core inflation.

The U.S. central bank is widely expected to leave interest rates unchanged.

That said, the dot plot, a grid of members’ projections for the fed funds rate, coupled with Chair Jerome Powell’s comments should offer markets more clarity on when the Fed could begin cutting rates next year.

Thursday’s European Central Bank (ECB) and Bank of England (BoE) decisions also remain under investors’ radar, with the ECB expected to cut its growth and inflation forecasts.

The BoE is expected to deliver a hawkish hold, keeping interest rates unchanged at 5.25 percent.

Meanwhile, monthly GDP and foreign trade from the U.K. and industrial production figures from the euro area awaited later in the day.

Asian stocks traded mixed amid lingering concerns over deepening deflationary pressures in China.

The dollar held steady, and gold hovered near a three-week low while oil extended losses, after having fallen about 4 percent to a six-month low on Tuesday amid lingering concerns about the outlook for fuel demand and worries about possible oversupply in the market.

U.S. stocks rose overnight to reach their best closing levels in well over a year as new data showed consumer price inflation continued to slow, in line with expectations.

The annual rate of growth eased to 3.1 percent in November from 3.2 percent in October while core consumer price growth came in unchanged at 4.0 percent year-over year.

The Dow and the S&P 500 both gained about half a percent while the tech-heavy Nasdaq Composite climbed 0.7 percent.

European stocks ended flat to slightly lower on Tuesday after a choppy ride. The pan European STOXX 600 eased 0.2 percent.

France’s CAC 40 slipped 0.1 percent while the German DAX and the U.K.’s FTSE 100 finished little changed with a negative bias.

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