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European stocks edge higher; Fed meeting in focus

Published 11/01/2023, 04:38 PM
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Investing.com - European stock markets edged higher Wednesday, with the focus squarely on the conclusion of the latest U.S. Federal Reserve policy-setting meeting.

At 04:30 ET (08:30 GMT), the DAX index in Germany traded 0.2% higher and the CAC 40 in France climbed 0.2% and the FTSE 100 in the U.K. rose 0.1%.

Cooling inflation boosts sentiment in Europe

Sentiment has been boosted in Europe by Tuesday’s news that eurozone inflation dropped to its lowest level in over two years in October.

Prices grew by 2.9% year on year in October, the slowest pace since July 2021, from 4.3% a month earlier, according to Eurostat's flash estimate.

The data is likely to cement the market's view that the ECB is done with raising rates as part of its fight against high inflation. This follows the decision of ECB policymakers to pause the central bank’s longest streak of interest rate rises in its 25-year history last week, leaving the main policy rate at 4%.

Fed meeting in focus

However, it’s the U.S. central bank that will attract the most attention Wednesday, with the Federal Reserve set to conclude its latest policy-setting meeting later in the session.

The Fed is widely expected to stand pat on rates, and comments from Chair Jerome Powell will again take the spotlight as investors parse every word to gauge where interest rates are headed.

Data showing a resilient economy has markets considering the possibility of a 25 basis point hike in December, and traders are looking to see if Powell attempts to keep another hike on the table.

U.K. house prices rise in October

Back in Europe, there’s little on the European economic calendar Wednesday, although data from Nationwide showed that U.K. house prices rose 0.9% on the month in October, an annual fall of 3.3%, in a sign that this battered sector is attempting a recovery after a series of rate hikes by the Bank of England.   

Aston Martin slumps after hefty loss

In corporate news, Aston Martin (LON:AML) stock fell over 9% after the British luxury carmaker posted a wider-than-expected quarterly loss and lowered its 2023 volume outlook due to production issues for its new sports car DB12. 

Skanska (ST:SKAb) stock slumped over 12% after the Swedish builder reported disappointing third-quarter earnings as weak property markets took a toll in the shape of asset writedowns and goodwill impairment charges.

Neste (HE:NESTE) stock fell 0.5% after the Finnish refiner announced plans to substantially cut costs, including shedding 400 jobs globally.

On the flip side, Barry Callebaut (SIX:BARN) stock rose 2.5% after the world's biggest chocolate maker adjusted its key mid-term target, and now expects volumes to rise by a low to mid single-digit percentage over the next three years, after previously forecasting average volume growth of below 5% in the same period.

Crude edges higher ahead of Fed decision

Oil prices crept higher Wednesday in cautious trading ahead of the conclusion of the latest Fed meeting, with traders also closely watching the latest developments in the Israel-Hamas conflict.

By 04:30 ET, the U.S. crude futures traded 0.5% higher at $81.43 a barrel, while the Brent contract climbed 0.6% to $85.50. Both contracts fell more than 1% the previous session, and also tumbled more than 10% in October, their worst month since May. 

Data from the American Petroleum Institute industry body indicated, on Tuesday, that U.S. oil inventories rose 1.3 million barrels last week, slightly less than expected. 

Official data from the Energy Information Administration is due later in the session.

Additionally, gold futures fell 0.3% to $1,987.40/oz, while EUR/USD traded 0.2% lower at 1.0559.

 

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