LONDON — European stocks are expected to open flat to higher on Tuesday as global markets await the U.S. Federal Reserve’s interest rate decision.
The U.K.’s FTSE index is seen opening a touch higher, Germany’s DAX and France’s CAC 40 0.2% lower and Italy’s FTSE MIB just below the flatline, according to data from IG.
The big event for investors this week is the Fed’s two-day meeting, which begins on Tuesday. The market is now pricing in a 96% chance that the U.S. central bank will announce a 25 basis-point rate cut this week, according to the CME Fedwatch tool.
Traders are also hoping for a signal from Fed Chair Jerome Powell on Wednesday that the central bank will cut once more at its final meeting of the year in December, given concerns about a weakening labor market.
The Fed is dealing with an economic data blackout given the ongoing U.S. government shutdown, with last week’s inflation report one of the few data pieces to be released recently.
Geopolitics and trade are also at the forefront of investors’ minds this week amid hopes that the U.S. and China can resolve an escalating trade dispute. President Donald Trump and Chinese President Xi Jinping are due to meet in South Korea on Thursday in an attempt to ease trade tensions.
Both sides appear to be in a conciliatory mood, having agreed on a framework for a potential trade deal which addresses China rare earths export restrictions, soybean purchases and TikTok.
“I have a lot of respect for President Xi, and we are going to come away with the deal,” Trump said Monday. The leaders are due to meet on the sidelines of the Asia-Pacific Economic Cooperation, or APEC, Summit.
Earnings reports in Europe on Tuesday include Novartis, BNP Paribas, Capgemini, Air Liquide, Iberdrola, ASM International and Logitech. Data releases include EU new car registrations and German consumer confidence figures.
Earlier Tuesday, earnings from Europe’s largest lender HSBC beat third-quarter profit expectations.
— CNBC’s Pia Singh contributed to this market report.