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European stocks edge higher ahead of Fed meeting; U.K. returns to growth

Published 06/14/2023, 02:20 AM
Updated 06/14/2023, 03:32 AM
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Investing.com - European stock markets edged higher Wednesday as investors digested U.K. growth data ahead of the conclusion of the U.S. Federal Reserve’s latest policy-setting meeting.

At 03:30 ET (07:30 GMT), the DAX index in Germany traded 0.2% higher, the CAC 40 in France rose 0.3%, while the FTSE 100 in the U.K. traded 0.1% higher.

Caution ahead of Fed announcement

Investors have adopted a cautious stance in Europe Wednesday even as Tuesday’s soft U.S. inflation data largely removed any bets that the Fed officials would agree to a rate hike later in the session.

A pause in the U.S. central bank’s year-long rate hiking cycle is largely baked in now, and the uncertainty revolves around the language used to guide expectations of future action as well as the new quarterly economic projections.

Policymakers may well signal more rate increases are still to come once they take time to assess how the economy is coping with the more than 500 basis points of combined hikes already announced.

U.K. GDP recovers in April

Back in Europe, the U.K. economy grew by 0.2% on the month in April, an improvement from the 0.3% drop the prior month, but industrial production fell 0.3% in the same time period.

"Looking ahead, we continue to expect GDP in Q2 as a whole to be unchanged from Q1," said Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics.

There's also euro-area industrial production for April to digest later in the period, a day before the European Central Bank meets to make its latest monetary policy decision.

Shell plans to boost dividends

In corporate news, energy giant Shell PLC (LON:SHEL) announced plans to sharply ramp up the return to its shareholders, including a 15% dividend boost and an increase in the rate of its share buyback program starting in the second quarter to $5 billion from $4B in recent quarters. Its stock rose 0.7%.

Prosus (AS:PRX) stock fell 1.3% after the tech investor warned that its profit dropped significantly last year due to impairments and lower contributions from its biggest holding, Chinese software and gaming giant Tencent (HK:0700).

ProSiebenSat.1 Media SE (ETR:PSMGn) stock rose 0.5% after Group CEO Bert Habets stated that the German media group is preparing to cut significantly more staff than in previous restructurings in order to reduce costs.

Oil edges higher ahead of U.S. inventories

Oil prices edged higher Wednesday, stabilizing after the previous session’s strong gains as traders await the outcome of the Fed’s latest meeting and government data on U.S. crude stockpiles.

By 03:30 ET, U.S. crude futures traded 0.1% higher at $69.45 a barrel, while the Brent contract climbed 0.2% to $74.44.

Both benchmarks climbed more than 3% on Tuesday, boosted by China's central bank attempting to stimulate its economy by cutting a short-term lending rate. Soft U.S. inflation data also raised the possibility that the U.S. central bank will pause its rate-hiking cycle at its meeting later in the session.

Data from the American Petroleum Institute showed that U.S. crude inventories unexpectedly grew by about 1 million barrels last week, putting the focus on government data due later in the day.

Additionally, gold futures rose 0.2% to $1,961.95/oz, while EUR/USD traded 0.1% higher at 1.0795.

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