European Stocks Anticipate Fed Rate Cut
LONDON – European stock markets opened slightly higher as traders await the US Federal Reserve’s decision on monetary policy, anticipated to involve interest rate cuts on Wednesday.
The pan-European Stoxx 600 index saw a 0.2% increase around 9:08 am (4:08 am ET), with most sectors showing positive movement. Notably, Germany’s DAX index led the gains, up by 0.5%.
In the UK, major grocery retailers like Marks & Spencer and Sainsbury’s performed well, with their shares climbing 3.2% and 2.9%, respectively, in early trading. The latest UK inflation report showed stable annual growth at 3.8% for August, with food prices rising 5.1% year-over-year, while alcohol and cigarette prices saw a rise to 5.9%.
Sainsbury’s shares extended their gains after the company announced it had concluded talks regarding the sale of the Argos brand to JD.com in China.
Additionally, defense stocks experienced an upward trend, as the Stoxx Aerospace and Defense Index rose by 0.3% early in the day. This followed reports about military exercises involving Indian forces alongside Russian and Belarusian troops near Minsk, as well as incidents involving Russian drones in Polish and Romanian airspace.
German defense firms Rheinmetall and Hensoldt saw their shares increase by 2.5% and 1.9%, respectively, while Swedish defense stocks were up by 2.3%.
Market attention is firmly on the Fed meeting, with expectations building for a 25 basis point rate cut. A closely watched “dot plot” will provide insights into the Fed’s economic forecasts over the next year.
European markets had dipped on Tuesday as investors reflected on the progress of US-China trade discussions that took place in Madrid earlier that week.
U.S. Treasury Secretary Scott Bescent mentioned on CNBC that he believes there will be further trade discussions between Washington and Beijing before tariffs would be imposed in November. “We’ll see each other again,” he said, indicating that he feels the talks are becoming increasingly productive and that the Chinese may see trade agreements as feasible.
President Trump’s proposed tariffs, initially intended to impose a 145% charge on imports from China, were delayed to facilitate trade negotiations, with a deadline set for November 10th.
In a different context, President Trump’s state visit to the UK is underway, with him and First Lady Melania spending time at Windsor Castle with King Charles and Queen Camilla before their scheduled meeting with British Prime Minister Keir Starmer on Thursday.
