European equities moved higher on Wednesday as markets recovered from the previous session’s three-month lows, with attention firmly focused on the Federal Reserve’s latest interest rate decision and the outlook for monetary policy.
The pan-European STOXX 600 advanced around 0.6%, putting the benchmark on course for its strongest daily increase in more than a month. The move followed a sustained period of pressure across European markets, where elevated energy prices, disruption to Middle Eastern shipping routes and higher sovereign bond yields have weighed on sentiment and valuations.
Major national indices also moved higher. Germany’s DAX gained around 0.3%, while France’s CAC 40 and the UK’s FTSE 100 each rose approximately 0.6%. Italy’s FTSE MIB was among the stronger major benchmarks, gaining around 0.9%.
Recent weakness has reflected concerns that persistent inflationary pressures, particularly those linked to energy costs, could require central banks to keep financial conditions tighter than previously expected. The Federal Reserve’s policy announcement therefore represents a significant near-term reference point for equity and fixed-income markets.
Interest rate futures indicated that markets were assigning roughly a 92% probability to a 25 basis point increase in US interest rates. Expectations had shifted materially within the previous week as persistent US inflation and elevated oil prices strengthened the case for tighter monetary policy.
JPMorgan European Discovery Trust plc is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
