European stock markets ended higher on Wednesday ahead of Federal Reserve’s interest rate decision. Investors were cautious awaiting an expected interest rate hike announcement by the Federal Reserve at conclusion of its two-day policy meeting. The Stoxx Europe 600 index edged 0.2% higher, with both Germany’s DAX 30 index and France’s CAC 40 index gaining 0.2%. Greek shares outperformed as they rose 3% after the Greek parliament approved reforms demanded by the country's international lenders. In economic news the final reading of euro-zone inflation for November rose 0.2% against the initial estimate of 0.1% and the flash euro-zone composite purchasing-manager index for December fell to a two-month low of 54.0, while the manufacturing reading rose to a 20-month high at 53.1. Today at 10:00 CET German Ifo Business Climate Index for December and ECB Economic Bulletin will be released. The tentative outlook is positive for euro.
Nikkei rose 1.6% today to more than one-week high at 19,353.56 as investor confidence was bolstered after the Federal Reserve raised the interest rates, interpreted as a sign that US economy has recovered, and a gradual path of future hikes was indicated.
Oil futures prices are extending losses today after slumping on Wednesday following a surprise 4.8 million-barrel jump in US crude inventories and interest rate hike by the Federal Reserve. January WTI crude sank 4.9% to $35.52 a barrel on the New York Mercantile Exchange, and January Brent crude dropped 3.3% to $37.19 a barrel on London’s ICE Futures exchange on its expiration day.
Gold is edging lower today after closing higher on Wednesday with spot gold ending up 1.2%. The Federal Reserve rate forecast, the dot points, indicated policy makers expect 1% increase in interest rates next year. Higher interest rates and strong dollar negatively impact the demand for non-interest rate paying gold.
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