European Stocks Edge Higher Before US CPI, Fed Rates Decision

European stocks advanced ahead of a crucial day for markets as the Federal Reserve will provide updated rate projections a few hours after a key US inflation print.

Bloomberg
Published12 Jun 2024, 11:21 PM IST
European Stocks Edge Higher Before US CPI, Fed Rates Decision
European Stocks Edge Higher Before US CPI, Fed Rates Decision

European stocks advanced ahead of a crucial day for markets as the Federal Reserve will provide updated rate projections a few hours after a key US inflation print.

The Stoxx Europe 600 Index rose 0.3% at 8:04 a.m. in London. Banks and insurers led the gains, while among individual movers, Rentokil Initial Plc climbed 16% after people with knowledge of the matter said activist investor Nelson Peltz’s Trian Fund Management LP has amassed a significant stake in UK-based pest-control company.

The May consumer price index reading expected at 1:30 p.m. in London will help inform the Fed decision, due after the European market close on Wednesday. The policy-setting Federal Open Market Committee is widely expected to hold its benchmark rate steady for a seventh consecutive meeting as it awaits more evidence that inflation is still moving down toward its 2% target, but there’s less certainty on officials’ rate projections. 

Some 41% of economists expect the Fed to signal two cuts in the closely watched “dot plot,” while an equal proportion expect the forecasts to show just one or no cuts at all, according to the median estimate in a Bloomberg survey.

The European Central Bank has moved ahead of the Fed for the first time ever, cutting rates last week, but said it wasn’t pre-committing to a particular rate path. The focus has now turned to political risks. The Stoxx 600 has dropped so far this week after European parliamentary voting over the weekend. Traders are particularly fixated on French assets, which have tumbled after President Emmanuel Macron’s decision to call a snap parliamentary election.

“Globally, we’re witnessing a resurgence in temporary inflation pressures, and any discrepancies in today’s data could ignite significant market volatility,” said Florian Ielpo, head of macro research at Lombard Odier Asset Management. “On the flip side, the fundamentals of growth appear robust. A lower-than-expected number combined with an unchanged Fed stance could help markets overcome their fear of tightening and ignite another bout of bull markets.”

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With assistance from Michael Msika.

This article was generated from an automated news agency feed without modifications to text.

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First Published:12 Jun 2024, 11:21 PM IST
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