By Peter Nurse
Investing.com - European stock markets traded higher Wednesday, boosted by the announcement of an unscheduled European Central Bank get together ahead of a Federal Reserve policy meeting which is expected to result in aggressive tightening to curb rampant inflation.
By 3:50 AM ET (0750 GMT), the DAX in Germany traded 0.6% higher, the CAC 40 in France rose 0.6%, and the UK’s FTSE 100 climbed 0.3%.
The ECB confirmed earlier in the session that it is to hold an unscheduled council meeting later Wednesday to discuss recent volatility.
This move follows a sharp widening in the spreads between the yields of Germany and more indebted southern nations, particularly Italy, after ECB President Christine Lagarde had failed to give any detail about what it might do to stop what it calls "financial fragmentation" as the central bank starts raising interest rates in July.
A speech late on Monday by ECB board member Isabel Schnabel had already hinted heavily that the ECB felt the need to improve on its communication, and the meeting raises hopes that the central bank will provide some clarity about what sort of measures it might take to support highly indebted nations.
Away from Europe, the market’s focus is on the conclusion of the latest two-day policy meeting by the Federal Reserve, which is expected to result in the U.S. central bank raising its key rate by 75 basis points when it announces its policy decisions at 2 PM ET (1800 GMT).
Worries that a hawkish Fed will hurt U.S. growth, and by extension global growth, have pressured the world’s stock markets, helping drive the benchmark S&P 500 index into bear market territory, which could indicate a recession is approaching.
French consumer prices rose 0.7% on the month in May, slightly above expectations, climbing 5.2% on the year. Earlier in the day, China's economy showed signs of recovery in May as industrial production rose 0.7% in May from a year earlier, after falling 2.9% in April.
In corporate news, H&M (ST:HMb) stock fell 3.4% despite the clothes retailer saying it expects to post a better-than-expected increase in second-quarter net sales.
Stellantis (EPA:STLA) stock rose 1.7% after the world’s fourth-largest carmaker announced plans to cut costs by laying off some U.S. employees, while Bloomsbury Publishing (LON:BLPU) stock soared 5% after the Harry Potter publisher reported a 40% jump in annual profit and raised its final dividend payout.
Oil prices stabilized Wednesday as traders focused on the Fed decision and the potential for further U.S. monetary tightening.
U.S. crude inventories unexpectedly increased last week, according to data from the industry body American Petroleum Institute, but gasoline stockpiles still fell by 2.2 million barrels last week, suggesting demand from American drivers remained strong despite the record prices.
The official numbers from the U.S. Energy Information Administration are due later in the session.
By 3:50 AM ET, U.S. crude futures traded 0.1% higher at $118.95 a barrel, while the Brent contract rose 0.1% to $121.33.
Additionally, gold futures rose 0.5% to $1,822.05/oz, while EUR/USD traded 0.5% higher at 1.0464.