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Friday, December 3, 2021

European stocks edge higher ahead of Fed’s next move

European stocks edged higher on Wednesday as investors looked ahead to the U.S. Federal Reserve’s latest monetary policy decision

European stocks edged higher on Wednesday after swinging in and out of the red as investors looked ahead to the U.S. Federal Reserve’s latest monetary policy decision.

The broader Stoxx Europe 600 Index SXXP, +0.31% was up 0.1% at 388.05, led lower by the industrial sector. But the tech sector was faring the best. On Tuesday, the pan-European index ended 0.1% lower.

After wavering around the flatline, Germany’s DAX 30 index DAX, +0.19% gained 0.1% to reach 12,848.71. The U.K.’s FTSE 100 UKX, +0.43% rose 0.1% to 7,713.36, edging into positive territory.

France’s CAC 40 index PX1, +0.26% added 0.3% to 5,471.44, while Italy’s FTSE MIB index I945, +0.90% gained 0.6% to reach 22,263.71. But Spain’s IBEX 35 IBEX, -0.02% fell 0.4% to 9,874.50.

The euro EURUSD, +0.1618% traded at $1.1745, on par with its level late Tuesday in New York.

The Fed is expected to issue its a monetary policy decision later Wednesday, after the close of trading. Moves by the U.S. central bank are closely watched as they have an impact on interest rates and investment decisions worldwide.

On Thursday, European Central Bank policy makers are expected to announce the timing of the unwinding the bank’s bond buying. On Friday, the Bank of Japan is scheduled to release its monetary policy update.

But ahead of that, oil and gas shares dropped alongside a fall in oil prices CLN8, -0.21%, spurred by surprise U.S. supply data. The American Petroleum Institute said Tuesday that U.S. crude supplies rose by 833,000 barrels last week, against an expected drop in stockpiles. The Stoxx Europe 600 Oil & Gas Index SXEP, -0.10% lost 0.3%.

On Wednesday, the IEA said it expects oil supply growth outside the Organisation of the Petroleum Exporting Countries to slow slightly next year, with the U.S. showing the biggest gain.

The Fed should issue its target range for the federal funds rate at the end of its two-day meeting on Wednesday. Investors are pricing in expectations for a rise of 25 basis points to 1.75% to 2%, from the current range of 1.5% to 1.75%. That would be the second U.S. interest rate hike this year.

Senior research analyst at, Peter Iosif said they expect the Fed to have a neutral to hawkish accompanying statement, as the U.S. economy had favorable financial releases recently.

He added that should the Fed’s forecasts alter, based on the recent acceleration of the inflation rate and the favorable employment report, there could be the dot plot implying a four rate hike path in 2018.


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