European Stocks Poised to Rise as Fed Rate Cut Expectations Grow Ahead of UK Budget

European stocks are set to open higher on Wednesday as investor expectations build for a potential U.S. Federal Reserve interest rate cut in December. The move comes as global markets react to signals from Fed officials and the broader economic outlook. Data from IG shows the U.K.’s FTSE index could rise 0.25%, Germany’s DAX up 0.7%, France’s CAC 40 by 0.67%, and Italy’s FTSE MIB by 0.64%.

Wall Street and Asia-Pacific markets have already shown gains, which are expected to influence European bourses positively. Market sentiment is largely driven by the anticipation that the Fed will cut rates at its next meeting on December 9–10. According to the CME FedWatch tool, investors are pricing in nearly an 85% chance of a 0.25% rate reduction. New York Fed President John Williams recently remarked that there is room to lower rates “in the near term.”

Further boosting global market sentiment, U.S. Treasury Secretary Scott Bessent told CNBC that there is a “very good chance” a new Fed chair could be appointed before Christmas. Kevin Hassett, the White House National Economic Council Director, has emerged as a frontrunner for the role and is seen as a candidate likely to favor lower interest rates.

In the U.K., all attention is focused on Chancellor Rachel Reeves as she delivers the Autumn Budget around 12:30 p.m. London time. Investors and business leaders are watching closely for any proposed tax hikes or spending adjustments, as Reeves seeks to adhere to fiscal rules while addressing the country’s budget shortfall. The Chancellor is expected to provide clarity on taxation and corporate spending policies for the year ahead.

There are no other major earnings reports or economic data releases scheduled in Europe on Wednesday, leaving markets largely influenced by Fed policy expectations and the U.K. budget announcement. Traders and investors will be closely monitoring developments for potential market-moving insights.

source: cnbc