European equities traded lower on Wednesday as crude oil prices increased and investors awaited the release of minutes from the Federal Reserve’s latest policy meeting.
The pan-European STOXX 600 declined 0.4% after reaching a near one-week high in the previous session.
Germany’s DAX fell 0.8%, while the FTSE 100 in London declined 0.4%. Spain’s IBEX 35 was down 0.6%, while France’s CAC 40 also fell 0.6%.
Oil prices moved higher as markets assessed geopolitical risks following missile and drone attacks by Yemen’s Houthi forces targeting Saudi Aramco energy facilities in Saudi Arabia.
French Fiscal Outlook Remains in Focus
European equities had recently fallen to their lowest levels since June amid a sell-off in government bonds following the presentation of France’s draft budget.
Concerns surrounding French government debt and the country’s political outlook pushed the French 10-year government bond yield to levels last seen in 2002, while the spread over German government bonds widened beyond 140 basis points.
European markets subsequently recovered some ground after plans were outlined to reduce French government spending by €54 billion and lower structural deficits.
However, uncertainty remains over France’s fiscal and political outlook ahead of the country’s 2027 presidential election.
Investors Await FOMC Minutes and Third-Quarter Earnings
Attention is also turning to the Federal Open Market Committee minutes from the Federal Reserve’s previous policy meeting, which are due later on Wednesday.
Investors will be looking for further information on policymakers’ views regarding the outlook for US interest rates.
Money markets currently indicate an approximately 78% probability that the Federal Reserve will leave interest rates unchanged at its next meeting, according to the supplied information.
European investors are also preparing for the third-quarter corporate earnings season, which is due to begin next week.
Company guidance will provide further information on the impact of higher energy costs, elevated borrowing costs and consumer demand on corporate margins and earnings expectations.
Leave a Reply