European stocks edge higher; U.K. growth data disappoints ahead of Fed meeting

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European stocks edge higher; U.K. growth data disappoints ahead of Fed meeting - European stock markets traded marginally higher Wednesday, as investors digested weak U.K. growth data ahead of the Federal Reserve’s last policy-setting meeting of the year. 

At 03:20 ET (08:20 GMT), the DAX index in Germany traded 0.1% higher, the CAC 40 in France traded up 0.1% and the FTSE 100 in the U.K. rose 0.1%.

Fed meeting concludes later Wednesday

Global stock markets have enjoyed a good December so far, gaining around 1% for the month thus far in traditionally a strong period, on growing expectations that the world’s major central banks have ended their prolonged hiking cycles.

The Federal Reserve concludes its two-day policy meeting later Wednesday, and is widely expected to keep rates unchanged. This will leave Chair Jerome Powell's comments on current conditions and the central bank's dot plot of future policy as the main focus, particularly in the wake of Tuesday's U.S. inflation print.

The market is now looking at a strong chance of a rate cut in the summer, and analysts at Goldman Sachs over the weekend brought forward their forecast of a first cut to the third quarter of next year from the fourth quarter previously.

The European Central Bank , the Bank of England , the Swiss National Bank and Norges Bank all follow the Fed this week, with policy decisions for all on Thursday.

U.K. economy shrank in October

Economic data of late have pointed to a likely recession for the eurozone in the final quarter of the year, and Wednesday’s news suggests the U.K. will also struggle.

Britain's economy shrank in October, with gross domestic product falling 0.3% from September, the first time since July that GDP had shrunk on a month-by-month basis, and raising the risk of a recession.

Eurozone industrial production for October is due later in the session, and is expected to show a monthly drop of 0.3%, a fall of 4.6% on an annual basis.

Inditex’s net profit surges

In corporate news, Inditex (BME: ITX ) stock rose 0.5% after the world’s largest fashion retailer reported that its net profit jumped by around a third in the February-October period, but the fast fashion giant's sales growth in that time frame slowed down from a year ago amid tougher times for consumers.

Crude falls ahead of Fed announcement

Oil prices fell Wednesday, continuing the previous session’s sharp losses on oversupply and demand growth concerns ahead of the conclusion of the latest Fed meeting.

By 03:20 ET, the U.S. crude futures traded 0.6% lower at $68.20 a barrel, while the Brent contract dropped 0.7% to $72.74 a barrel. Both benchmarks dropped more than 3% on Tuesday to six-month lows.

The firmer-than-expected U.S. inflation readings for November, released on Tuesday, have trimmed expectations for early interest rate cuts by the Fed, which concludes its policy-setting meeting later Wednesday.

Data from the industry body American Petroleum Institute showed that U.S. oil inventories fell by a bigger-than-expected margin in the week to Dec. 8. But the potential draw comes on the heels of several consecutive weeks of strong builds. 

The official inventory data, from the Energy Information Administration , is due later in the day.

Additionally, gold futures rose 0.1% to $1,995.05/oz, while EUR/USD traded marginally lower at 1.0791.


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