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European stock markets experienced gains on Wednesday as investors digested regional growth and inflation data ahead of the conclusion of the Federal Reserve’s latest policy meeting.
Key Market Movements:
- DAX (Germany): +0.4%
- CAC 40 (France): +0.4%
- FTSE 100 (U.K.): +0.6%
Economic Data:
- German consumer prices rose 2.8% year-on-year in May, up from 2.4% in April. Services prices increased by 3.9% in May compared to the same period a year earlier.
- U.K. GDP remained flat in April following a 0.4% month-on-month rise in March. This data, coupled with Tuesday’s labor market figures showing falling employment and rising unemployment, points to a weakening economy.
Federal Reserve Meeting in Focus:
The main focus for investors on Wednesday is the conclusion of the Federal Reserve’s policy meeting. While the central bank is expected to hold interest rates steady, policymakers are likely to revise their projections for three rate cuts this year due to persistent inflation. Market expectations currently anticipate about 36 basis points of easing this year, with the odds of a September cut at roughly 50:50. The widely-watched U.S. consumer price index (CPI) inflation data is also due for release, providing further insights into the inflation landscape.
Crude Oil Prices Rise on Demand Optimism:
Crude oil prices climbed on Wednesday, buoyed by positive outlooks for global demand. The American Petroleum Institute reported a larger-than-expected decline in U.S. oil inventories, raising hopes of increased fuel consumption during the summer travel season. Additionally, the U.S. Energy Information Administration raised its 2024 world oil demand growth forecast, and OPEC maintained its forecast for relatively strong demand growth in its monthly report. Market participants are also anticipating the release of the International Energy Agency’s monthly report and the EIA’s official weekly U.S. inventories report later this week.
