European equities pushed higher on Wednesday, lifted by growing confidence that the Federal Reserve will deliver a rate cut in December as investors also await the U.K. Autumn Budget.
As of 08:02 GMT, Germany’s DAX was up 0.6%, France’s CAC 40 gained 0.6%, and the U.K.’s FTSE 100 added 0.1%.
Fed expectations fuel market optimism
Stocks across Europe tracked gains in the U.S. and Asia as traders increased their bets on a Fed cut at the central bank’s upcoming Dec. 9–10 meeting.
On Tuesday, the S&P 500 logged a third straight advance after softer-than-expected retail sales and weakening consumer confidence reinforced views that the Fed may soon ease monetary policy. According to CME’s FedWatch tool, markets are assigning an 82.7% probability of a 25-basis-point cut at next month’s meeting—up sharply from 43.4% just a week ago.
All eyes on the U.K. Budget
With little European economic data scheduled for release, attention is turning to the U.K. government’s fiscal plan due later in the day. Finance Minister Rachel Reeves is widely expected to introduce additional tax measures aimed at reassuring markets ahead of a potential downgrade to the nation’s economic outlook.
“We expect the Chancellor, Rachel Reeves, to raise taxes by about £38bn ,,, which will trim GDP growth, weigh on inflation and contribute to more interest rate cuts,” said Ruth Gregory, Deputy Chief UK Economist at Capital Economics. “That is likely to be received warmly by the markets and could prevent Reeves from having to come back with more tax rises next year.”
The Bank of England meets in mid-December and is broadly expected to reduce rates by 25 basis points to 3.75%, anticipating that the tax measures in the budget will require further monetary support. That expectation was reinforced by a YouGov survey for Citi showing inflation expectations for the year ahead dropped to 3.7% in November from 4.2% the prior month. Longer-term expectations also declined, easing to 3.9% from 4.2%.
AstraZeneca in focus after U.S. drug approval
Corporate news in Europe is otherwise limited, but AstraZeneca (LSE:AZN) is likely to draw attention after U.S. regulators approved its cancer therapy Imfinzi for certain resectable stomach and gastroesophageal junction cancers.
Oil steadies near recent lows
Crude prices were little changed Wednesday, hovering near the lowest levels in more than a month as traders weighed the possibility of a supply surplus and renewed optimism around a Russia-Ukraine peace framework.
Brent slipped 0.1% to $61.75 a barrel, while U.S. West Texas Intermediate dipped 0.4% to $57.90. Both benchmarks weakened on Tuesday after President Volodymyr Zelenskiy told European officials he was ready to move forward with a U.S.-supported plan to end the conflict—potentially enabling Russian oil to flow more freely onto global markets.
U.S. crude inventories declined last week, according to the American Petroleum Institute, with official Energy Information Administration stockpile figures expected later Wednesday.
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