European Markets Open Flat as Investors Await December Interest Rate Decisions

European stock markets are expected to open flat to slightly lower on Tuesday as the region continues to struggle for momentum at the start of December. Despite entering the final trading month of the year, investors appear cautious, with sentiment weighed down by uncertainty around upcoming monetary policy decisions.

Forecasts from IG show a subdued start across major indices. The U.K.’s FTSE is poised to dip by around 0.12%, Germany’s DAX looks set to open unchanged, France’s CAC 40 may fall 0.16%, while Italy’s FTSE MIB is projected to hover just below the flatline. This follows a downbeat trading session on Monday that signaled a soft beginning to December.

Much of the market hesitation stems from expectations surrounding the U.S. Federal Reserve’s next move. Traders are currently pricing in an 87.2% probability of a quarter-point rate cut when the Federal Open Market Committee meets on Dec. 9–10, according to the CME FedWatch Tool. The Bank of England is also keeping a close eye on the Fed’s decisions, with MPC member Megan Greene noting that half of the movements in the U.K.’s yield curve originate from outside the country.

Although the Bank of England has not committed to cutting rates in December, many economists believe a reduction is likely. Cooling inflation, slow economic growth, and a softening labor market are among the factors strengthening expectations. Recent disinflationary steps announced in the Autumn Budget may further encourage policymakers to ease borrowing costs.

Across the Atlantic, U.S. stock futures remained flat overnight after markets stumbled on Monday, while Asia-Pacific indices traded mostly higher. In Europe, investors will be watching for fresh economic data on Tuesday, including unemployment figures from Spain and Italy, as well as updated EU inflation numbers. No major corporate earnings are scheduled for release.

source: cnbc