European Stocks Edge Higher Ahead of Fed’s Policy Meeting and Amid Weak UK Growth

Summary

  • European stock markets trade slightly higher as investors processed low U.K. growth data before the Federal Reserve’s final policy-setting meeting of 2021.
  • Global stock markets have experienced decent growth in December, as it is traditionally a strong month, with expectations of the world’s major central banks ending their extended interest rate hike cycles.
  • The British economy contracted in October, increasing the risk of a recession.
  • The net profit of the world’s largest fashion retailer Inditex has seen a significant increase.
  • Oil prices decreased ahead of the conclusion of the Federal Reserve meeting.

European markets show moderate growth amid weak U.K. data

On Wednesday, European stock markets observed a minor increase as investors assessed the disappointing U.K. growth statistics ahead of the final policy-setting meeting of the Federal Reserve for 2021.

Fed Meeting Scheduled for Later in the Day

Global stock markets have prospered in December, enjoying approximately a 1% gain for the month so far. This period is typically robust, and it indicates growing anticipation that the world’s major central banks have ceased their lengthy interest rate rising periods. The Federal Reserve is set to conclude its two-day policy meeting later today. As anticipated, rates are expected to remain the same, grabbing the attention towards Chair Jerome Powell’s comments on current economic conditions and future policies of the central bank.

Predictions of Rate Cut

Market experts predict a significant chance of rate cuts in the summer. Notably, analysts at Goldman Sachs have moved up their forecast for the first cut to the third quarter of 2022, which was predicted for the fourth quarter earlier.

Struggles for U.K. Economy

Recent economic indicators suggest a potential recession for the eurozone in the last quarter of 2021, and the U.K. economy could follow suit. The British economy saw a decrease in October, raising concerns about an imminent recession.

Inditex sees significant growth in net profit

In business news, Inditex stocks soared by 0.5% after it was reported that the world’s leading fashion retailer saw a rise in net profit during the February-October period. However, consumers faced challenges as the fashion juggernaut’s sales growth somewhat slowed during this period compared to the previous year.

Drop in Oil Prices Ahead of Fed’s Decision

Ahead of the Fed’s meeting, oil prices dipped on Wednesday. This drop continues from a sharp loss in the previous session due to oversupply and concerns over demand growth.

The current outlook anticipates movements in the forex and trading markets, particularly as investors closely watch the Federal Reserve’s decisions and the potential for a summer rate cut. Assets such as European stocks and oil are in the spotlight.

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