European stocks opened mixed on Wednesday as the “wait and see” approach stays in place ahead of the FOMC’s decision on interest rates later today. Jerome Powell is largely expected to proceed with another 25-basis point rate cut in order to battle a decreasing US inflation rate. However, the situation is not as urgent as it used to be for the FED as the US Economy remains sound and solid according to the last Employment and Trade Balance figures, which means chances of a less dovish tone from the FOMC are higher than before. A surprise decision from the FED would have an immediate negative impact on stock prices as markets have already priced a rate cut from the FED.
Photo by Toby Yang.
In addition to the FOMC’s decision, investors will also pay attention to the trade talks resumption between top US and China negotiators, ahead of the official October meeting, as concerns over the trade war linger.
Elsewhere, traders are keeping an eye on the political situation in Spain as the country heads for snap elections after parties refuse to share powers. This came out as a surprise for most investors and the IBEX-35 index in Madrid is registering the worst performance in the Eurozone as prices broke-out the 8,980.0pts support level and are now heading to the 8,940.0pts/8,960.0pts zone. Traders are bracing for a complex end of week as many await important data releases; CPI data from the EU, UK and Canada as well as Building Permit and Crude Oil Inventories from the US are to be release today before the FED’s decision while central banks of Japan, UK and Indonesia will decide on their monetary policy on Thursday, ahead of the Friday’s ‘quadruple witching’ trading session where volatility surge is widely anticipated.
