European markets edge higher as markets await Fed outcome

KEY POINTS
  • Global market attention will be on the outcome of the Federal Reserve’s two-day meeting due on Wednesday.
  • U.K. inflation exceeded expectations in May, according to official statistics published Wednesday. The Consumer Price Index rose 2.1% year-on-year and 0.6% month-on-month.

(CNBC)/LONDON — European stocks were slightly higher on Wednesday, as markets await the outcome of the U.S. Federal Reserve’s policy meeting.

TICKER COMPANY NAME PRICE CHANGE %CHANGE VOLUME
.FTSE FTSE 100 FTSE 7181.78 9.30 0.13 94572917
.GDAXI DAX DAX 15699.68 -29.84 -0.19 9566622
.FCHI CAC 40 Index CAC 6643.61 4.09 0.06 11888626

The pan-European Stoxx 600 climbed 0.2% in early trade, with oil and gas stocks adding 0.7% while basic resources and autos fell 0.7%.

Global market attention will be on the outcome of the Federal Reserve’s two-day meeting due on Wednesday.

U.S. stock index futures were little changed during overnight trading on Tuesday. U.S. stocks pulled back from record levels during Tuesday’s trading session, with the S&P 500 closing 0.2% lower after hitting an all-time high earlier in the day.

The central bank is not expected to make any policy moves, but it could signal that it’s beginning to think about easing its bond-buying policy.

The Fed will also release new forecasts on Wednesday, which could indicate a possible first rate hike penciled in for 2023. Previously, Fed officials hadn’t come to a consensus for a rate hike through 2023.

The meeting comes as inflation heats up, with producer prices rising at their fastest annual rate in nearly 11 years during May. This has prompted some, including Paul Tudor Jones, to call for the central bank to rethink its easy monetary policy.

Meanwhile, shares in Asia-Pacific were mixed in Wednesday trade as investors reacted to data releases in China as well as the Fed’s latest decision.

Chinese retail sales rose 12.4% in May from the same period last year, missing analyst expectations of 13.6% despite the government’s efforts to boost spending.

U.K. inflation exceeded expectations in May, according to official statistics published Wednesday. The Consumer Price Index rose 2.1% year-on-year and 0.6% month-on-month, compared to expectations of 1.8% and 0.3% respectively.

“Although U.K. CPI may now further overshoot the Bank of England’s 2% target, we still think it will come down again to around 2% in 2022,” said Willem Sels, chief investment officer for private banking and wealth management at HSBC.

“There is significant spare capacity in labour markets, with more than two million U.K. workers remaining on furlough, meaning it is unlikely that a wage spiral develops, and hence CPI pressures should be temporary.”

In terms of individual stock movement, shares of Dutch retailer Colruyt Group fell more than 8.7% in early trade after the company missed fiscal full-year earnings expectations and issuing a profit warning.

Scroll to Top