Investing.com - European stock markets traded higher Wednesday, boosted by a slowing in U.K. inflation while investors await the latest monetary policy decision by the U.S. Federal Reserve.
At 03:40 ET (07:40 GMT), the DAX index in Germany traded 0.5% higher, the CAC 40 in France climbed 0.1% and the FTSE 100 in the U.K. grew 0.6%.
U.K. headline inflation retreats in August
Data released earlier Wednesday showed that U.K. consumer inflation rose 0.3% on the month in August, with the year-on-year headline figure unexpectedly falling to 6.7% from 6.8% in July.
The Office for National Statistics said the fall was driven by a drop in hotel prices and air fares, which are often volatile, and by food prices rising by less than at the same time last year.
Higher energy prices had been expected to prompt a jump to 7.0%, and while the Bank of England is still widely expected to announce another 25-basis-point increase in interest rates when it meets on Thursday, slowing growth could mean that the U.K. central bank also signals that the end of its rate-hiking cycle is not far away.
Fed rate decision looms large
However, attention Wednesday is more likely to be on the U.S. Federal Reserve, which completes its two-day policy-setting meeting later in the session.
The U.S. central bank is widely expected to keep interest rates steady at a range of 5.25% to 5.50% after raising them at 11 of its past 12 meetings in a bid to cool inflation.
But uncertainty reigns over what the Fed will do in following meetings this year, especially as rising energy prices threaten to lead to an unwelcome return of elevated inflation.
The People’s Bank of China, earlier Wednesday, held its benchmark loan prime rates at record lows, as it attempted to strike a balance between supporting an economic recovery and stemming further weakness in the yuan.
EU car sales grow again
In corporate news, data released Wednesday showed EU car sales grew 21% in August, the thirteenth consecutive month of sales growth as the auto industry recovers from pandemic-related supply chain issues.
Just over one in five new cars sold in the European Union in August was fully electric, as sales of zero-emission models more than doubled, the European Automobile Manufacturers Association said.
Crude falls despite large U.S. drawdown
Oil prices fell Wednesday, retreating from 10-month highs, as markets digested a forecast of a large drawdown in U.S. crude inventories ahead of the Federal Reserve interest rate decision.
Data from the industry body American Petroleum Institute, released on Tuesday, indicated that U.S. crude inventories fell by over 5 million barrels last week. The official data is due later on Wednesday.
Yet, despite this hefty draw, traders are taking some profit ahead of the crucial Fed decision after worries of a substantial supply deficit this year had sent prices soaring to their highest levels since November last year.
By 03:40 ET, the U.S. crude futures traded 1% lower at $89.56 a barrel, while the Brent contract dropped 1% to $93.38.
Additionally, gold futures fell 0.2% to $1,950.05/oz, while EUR/USD traded 0.1% higher at 1.0690.