European stock markets traded mostly flat on Wednesday as investors awaited the Federal Reserve’s interest rate decision and continued to digest a heavy flow of corporate earnings from both sides of the Atlantic.
By 08:05 GMT, Germany’s DAX edged down 0.1%, France’s CAC 40 slipped 0.2%, while London’s FTSE 100 gained 0.4%, buoyed by strength in financial and energy shares.
Fed poised for a 25-basis-point cut
The U.S. central bank will conclude its two-day policy meeting later today, with markets almost fully expecting a 25-basis-point rate cut, bringing the federal funds rate to a range of 3.75%-4.00%.
According to the CME FedWatch Tool, traders are pricing in a 96% probability of such a move. With the ongoing U.S. government shutdown limiting access to fresh economic data, investors will closely analyze Chair Jerome Powell’s remarks for clues on future policy direction and the Fed’s view of the economy.
Attention will also turn to whether the central bank hints at ending its quantitative tightening program, which has gradually reduced its balance sheet since 2022.
U.S.-China trade tone softens
Geopolitical sentiment improved after U.S. President Donald Trump said he plans to reduce tariffs on Chinese imports linked to fentanyl precursors, ahead of his meeting with President Xi Jinping in South Korea on Thursday.
The two leaders are expected to discuss ways to de-escalate trade tensions, which have weighed on global markets this year. Trump also mentioned that he intends to bring up Nvidia’s (NASDAQ:NVDA) artificial intelligence chip Blackwell during the meeting.
Corporate earnings in focus
Markets are also bracing for another wave of major U.S. tech results, with Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META) and Microsoft (NASDAQ:MSFT) all scheduled to report after Wall Street’s close. Expectations remain high for these companies to justify their elevated valuations.
In Europe, UBS (NYSE:UBS) reported a 74% jump in third-quarter net profit, far exceeding forecasts, as strong trading activity and renewed M&A deals lifted revenue.
Deutsche Bank (TG:DBK) posted an 8% increase in quarterly pre-tax profit, supported by higher trading income and cost controls, while Santander (LSE:BNC) announced a 7.8% rise in profit year-on-year, citing solid U.S. operations that offset softer results in Brazil.
Meanwhile, Mercedes-Benz (TG:MBG) saw its operating profit tumble by more than two-thirds due to restructuring costs and fierce competition, particularly in the U.S. and China. Adidas (TG:ADS) also disappointed, with North American sales showing the weakest regional growth.
In the energy sector, Equinor (TG:DNQ) posted a 9.9% decline in quarterly profit, slightly worse than expected, as lower oil and gas prices weighed on results, though the company maintained its full-year production guidance.
GSK (LSE:GSK) raised its 2025 sales forecast, boosted by double-digit growth in HIV and oncology treatments during the third quarter.
Oil stabilizes after U.S. inventory draw
Crude prices steadied after two sessions of losses, supported by data showing a surprise draw in U.S. inventories.
Brent futures slipped 0.1% to $63.76 per barrel, while West Texas Intermediate traded nearly flat at $60.14.
According to the American Petroleum Institute, U.S. crude stocks fell by over 4 million barrels in the week ending October 24, while gasoline inventories declined by 6.35 million barrels.
The larger-than-expected inventory draw helped lift sentiment after earlier pressure from reports suggesting OPEC+ may consider a production increase in December.
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