European stocks mixed ahead of Fed rate decision; U.K. CPI steady at 3.8%

Investing.com - European stocks were mixed on Wednesday as investors awaited the latest monetary policy decision by the U.S. Federal Reserve, as well as regional inflation data. 

The DAX index in Germany climbed 0.2%, the CAC 40 in France fell 0.4% and the FTSE 100 in the U.K. rose 0.2%. 

Fed decision looms large 

Global markets, including European equities, are eagerly awaiting the conclusion of the Fed’s latest two-day policy meeting later in the session, with the U.S.central bank widely expected to cut interest rates, boosting risk sentiment generally.

Fed policymakers will also share more insight into their outlook for rates over the next year or so, while also releasing the quarterly Summary of Economic Projections.

Markets have priced in a near certainty the Fed will cut its key interest rate by a quarter of a percentage point to the 4.00%-4.25% range today. But they also anticipate the U.S. central bank will go further with nearly 150 basis points of easing through the end of next year.

“Global equity markets continue to edge higher on a cocktail of resilient business optimism and the prospect of lower core borrowing costs,” said analysts at ING, in a note. 

Regional inflation data in spotlight 

Aside from the Fed decision, investors also reacted to the release of the latest inflation data in the eurozone. 

Eurozone CPI stayed steady on an annual basis in August, suggesting the European Central Bank can delay further interest rate cuts, if needed, until later in the year.

The consumer price index rose by 2.0% annually last month, matching the July release, and slightly below the 2.1% growth expected.

Month-on-month, the reading gained 0.1% last month after posting a flat number in July.

The ECB left interest rates unchanged last week, but the policymakers kept their options open about possible future interest rate cuts, flagging an uncertain outlook for trade, energy prices and foreign exchange rates.

Earlier in the session, U.K. inflation held steady at 3.8% on an annual basis in August, almost twice the Bank of England’s target, suggesting the U.K. central bank will keep monetary policy unchanged on Thursday.

Trump in U.K. state visit 

U.S. President Donald Trump is in the U.K, enjoying a state visit with the president and his wife, Melania, spending the day at Windsor Castle with King Charles and Queen Camilla before holding talks with U.K. Prime Minister Keir Starmer on Thursday.

Pharmaceutical giant GSK (LON:GSK) used Trump’s arrival to announce that it is committed to investing at least $30 billion in U.S. research and developing and manufacturing over the coming five years.

The investment includes $1.2 billion toward advanced manufacturing, AI and advanced digital technologies to deliver “next-generation biopharma factories and laboratories in the United States,” the drug maker said.

Elsewhere, Nestle (SIX:NESN) has announced that Chairman Paul Bulcke would hand over earlier than expected to former Inditex CEO Pablo Isla.

The announcement of Bulcke’s departure late on Tuesday accelerated the leadership changes at Nestle, the maker of KitKat chocolate bars and Nescafe instant coffee, which has seen an unprecedented period of management turmoil.

Crude retreats from two-week highs

Oil prices slipped marginally lower Wednesday, handing back some of the previous session’s gains on heightened concerns over disruptions in Russian production. 

At 11:55 ET, Brent futures dropped 0.3% to $68.28 a barrel, and U.S. West Texas Intermediate crude futures fell 0.3% to $64.35 a barrel.

The benchmarks settled more than 1% higher on Tuesday, climbing to two-week highs, due to concerns that Russian supplies may be disrupted following Ukraine’s drone attacks on critical export ports and refineries.

Oil was also encouraged by U.S. industry data showing an outsized 3.2 million barrel draw in inventories over the week to September 12. This data,  from the American Petroleum Institute, usually heralds a similar reading from official inventory data, which is due later on Wednesday.