European stocks rose as all attention was focused on today’s Federal Reserve meeting – the first in four years, which is expected to raise interest rates. Photo: Tom Williams/CQ-Roll Call, Inc via Getty
European stocks rose on Wednesday as investors awaited a long-awaited decision by the US Federal Reserve on interest rate policy.
In London, the FTSE 100 (^FTSE) rose 1.3% after the open, while the CAC (^FCHI) gained 2.1% in Paris and the Frankfurt DAX (^GDAXI) rose 2%.
“All eyes are on today’s Federal Reserve meeting – the first in four years that is expected to raise interest rates,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
“If this does not happen, further volatility in the European and British markets should be expected. It is also worth bearing in mind that the Russian invasion of Ukraine means that the frequency and extent of rate hikes may not be as high as previously predicted.”
The positive mood is also emerging amid new signs that an agreement to end the conflict in Ukraine may be one step closer.
Meanwhile, traders will also be keeping an eye on the prospect that Russia could default on the bond payment.
An interest payment of $117 million (£90 million) is due on the US dollar bond, which Russia has said it will pay in rubles – this will start the clock in the event of a potential default. However, it will still have a 30-day grace period for coupon payments.
More: Bank of England intends to raise interest rates for the third time after the pandemic
In the US, S&P 500 (ES=F) futures were up 0.9%, Dow (YM=F) futures were up 0.7% and Nasdaq (NQ=F) futures were up 1.3% since the start of the trading in Europe.
On Tuesday, US markets managed to end the session sharply higher, with the S&P 500 index finishing ahead for the first time since last Wednesday.
Later in the session, the latest US retail sales report for February will be published. Sales are expected to rise 0.4% in February.
US retail sales rose significantly in January after declining 1.9% in December. Retail sales in January showed that despite weak consumer confidence, spending rose at its fastest pace in 10 months, rising 3.8%, well above expectations of 2%.
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The largest gains were seen in online sales, as well as sales of furniture, cars and building materials.
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Asian stocks rose on Wednesday, with the Nikkei (^N225) up 1.6% in Japan, while the Hang Seng (^HSI) soared over 9% in Hong Kong after falling earlier in the week, and the Shanghai Composite (000001. SS ) rose 3.5%.
The rally came after Beijing announced a policy to stimulate financial markets and economic growth.
See: How inflation affects interest rates