European Stocks Steady as Markets Await Fed Rate Decision and U.S.-China Trade Talks

European markets opened cautiously on Tuesday, with most indexes hovering around the flatline as global investors turned their focus toward the U.S. Federal Reserve’s upcoming interest rate decision. London’s FTSE 100 inched up 0.09% to 9,653.82, while Germany’s DAX and France’s CAC 40 remained unchanged. Italy’s FTSE MIB edged slightly below the flatline, reflecting investor hesitation ahead of key central bank announcements.

The Federal Reserve’s two-day meeting begins Tuesday, with markets almost certain—pricing in a 96% probability—that the U.S. central bank will announce a 25 basis-point rate cut this week, according to the CME FedWatch Tool. Investors are also looking for signals from Fed Chair Jerome Powell on whether another rate reduction could follow in December, as concerns about a slowing labor market and economic uncertainty persist.

The Fed faces the added challenge of limited access to fresh economic data amid a U.S. government shutdown, leaving last week’s inflation report as one of the few indicators guiding policymakers. This data blackout has made it harder for officials to gauge the health of the economy as they balance between supporting growth and containing inflationary risks.

Beyond monetary policy, geopolitics remains in sharp focus. Hopes are rising for a breakthrough in the ongoing U.S.-China trade dispute, with Presidents Donald Trump and Xi Jinping set to meet Thursday in South Korea during the APEC Summit. Both leaders appear optimistic, reportedly agreeing on a framework addressing rare earth exports, agricultural purchases, and the future of TikTok. “I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said Monday.

Meanwhile, corporate earnings added a layer of optimism to the European trading session. HSBC, Europe’s largest lender, reported stronger-than-expected third-quarter profits earlier Tuesday. Other major companies releasing earnings include Novartis, BNP Paribas, Capgemini, Air Liquide, Iberdrola, ASM International, and Logitech. Investors are also watching closely for EU car registration data and German consumer confidence figures to gauge regional economic momentum.

 source: cnbc