European markets head for a positive open as investors focus on the Fed’s next move

Soegeefx AppsEU MarketEuropean markets head for a positive open as investors focus on the Fed’s next move

Holly Ellyatt

European markets are heading for a positive open as global investors focus on the conclusion of the U.S. Federal Reserve’s policy meeting on Wednesday.

The U.S. central bank is expected to hike interest rates by 75 basis points on Wednesday when its meeting concludes.

The Fed is expected to raise interest rates by three-quarters of a point and then signal it could slow the pace

Many on Wall Street are looking for a signal from the Federal Open Market Committee’s statement or Chairman Jerome Powell’s press conference that the U.S. central bank could pause its hikes or reduce their size in the coming months.

Elsewhere overnight, shares in the Asia-Pacific and U.S. stock futures were broadly higher as investors braced themselves for the expected Fed hike.

Bank of England set for biggest rate hike in 33 years, but econ

The market expects the Bank of England to raise interest rates by 75 basis points on Thursday, its largest hike since 1989, but economists believe policymakers will strike a dovish tone looking ahead as the prospect of a recession deepens.

With U.K. inflation running at a 40-year high of 10.1% in September, the Bank is seen hiking its main lending rate for the eighth consecutive time, but weaker growth momentum and a major shift in fiscal policy is expected to ease calls for more aggressive monetary tightening.

– Elliot Smith

Oil futures rise following industry report of fall in U.S. crude inventories

Oil future prices rose on Wednesday after industry reports showed a drop in U.S. crude inventories in the latest week, Reuters reported, citing figures by the American Petroleum Institute Tuesday.

Brent crude futures gained $1.31, or 1.46%, to stand at $95.87 per barrel, while U.S. West Texas Intermediate rose 1.28% to $89.67 per barrel.

— Lee Ying Shan

CNBC Pro: Buy this automaker to play massive pent-up demand in U.S., fund manager says

There is huge demand for cars in both the U.S. and China right now, according to fund manager Steven Glass.

He named one autos stock to cash in, which he said has a “very well-managed” balance sheet and a price-to-earnings ratio at a 20-year low.

— Zavier Ong

A Fed pivot is far off, says New York Life’s Goodwin

Investors may be getting a bit too excited about potential changes from the Federal Reserve, according to Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

Goodwin said in a note that she expected the Fed to hike by 0.75 of a percentage point on Wednesday and half a point in December, but that the slowdown should not be seen as the start of a big shift from the central bank.

“A Fed pause is not the same as a pivot. Certainly, deteriorating economic and credit conditions could cause the Fed to pivot modestly at some point, but a full pivot into accommodative territory is highly unlikely in the next year,” Goodwin said in a note.

Goodwin pointed out that the first rate hikes should now start to show their impact across the broad economy, instead of just housing. However, the Fed will need several months of data to go its way before changing course.

“At this point, with inflation surprising as much as it has already, the Fed will want to see clear signs of reversal in wage growth before pivoting. Recession should be considered a base case rather than a risk,” Goodwin said.

— Jesse Pound

CNBC Pro: Goldman’s Currie reveals ‘the best’ hedge against inflation, rate hikes and geopolitical risks

Goldman’s Jeff Currie says there’s one investment that can protect investors from rising interest rates, inflation, and geopolitical risk.

Currie, global head of commodities research at Goldman Sachs, said it has 20-30% growth potential in the short term, with additional upside risks to the price target.

— Ganesh Rao

European markets: Here are the opening calls

European markets are looking at a positive start to trading on Wednesday as investors gear up for the latest monetary policy decision from the U.S. Federal Reserve.

Many analysts expect the meeting will result in a 75 basis point interest rate hike. Investors will also monitor the central bank’s statement and Fed Chair Jerome Powell’s press conference for signs of a slowing the tightening pace.

London’s FTSE index is expected to open 21 points higher at 7,115, Germany’s DAX up 84 points at 13,422, France’s CAC up 36 points at 6,364 and Italy’s FTSE MIB up 119 points at 22,771, according to data from IG.

Earnings will come from Next, Aston Martin Lagonda, GSK, Metro and Maersk. German unemployment data for October will also be released.

— Holly Ellyatt

Source : CNBC

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