European stocks may open on a cautious note Wednesday as investors look ahead to the Federal Reserve’s much-awaited policy decision later in the day.
Signs of slowing U.S. inflation bolstered bets that the Fed will hold its key interest rate steady after ten consecutive rate hikes over the last 15 months.
Investors will likely parse the accompany policy statement, the summary of economic projections and remarks from Fed Chairman Jerome Powell during the press conference for clues over the appropriate path forward for monetary policy.
Meanwhile, the European Central Bank is expected to raise interest rates by 25 basis points on Thursday despite deepening fears of a recession in Europe.
Asian stocks traded mixed, with Japanese markets leading regional gains ahead of Bank of Japan’s policy meeting due Friday.
After new bank lending data came in below forecasts, investors now anticipate more rate cuts and fiscal stimulus to support China’s economic recovery.
The dollar was under pressure, helping gold prices push higher. Oil held steady after recovering by more than 3 percent Tuesday from a three-month low.
U.S. stocks rose overnight after data showed the headline consumer price inflation increased by a less-than-estimated 4.0 percent in May on an annual basis, marking the slowest annual rate since March 2021.
The data added to optimism about the Fed pausing its recent interest rate increases at Wednesday’s meeting.
The Dow rose 0.4 percent to set a four-month closing high, while the tech-heavy Nasdaq Composite and the S&P 500 gained 0.8 percent and 0.7 percent, respectively to reach their best closing levels in over a year.
European stocks also moved higher on Tuesday, thanks to Fed pause hopes, strong economic data from Germany and China’s surprise rate cut.
The pan-European STOXX 600 rose 0.6 percent. The German DAX climbed 0.8 percent, France’s CAC 40 added 0.6 percent and the U.K.’s FTSE 100 edged up 0.3 percent.
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