European stock markets are poised for a mixed and cautious opening on Wednesday as investors globally turn their full attention to the US Federal Reserve’s impending monetary policy announcement.
Alongside the Fed decision, a heavy slate of corporate earnings reports from major European companies will provide further direction for regional markets.
Early indicators suggest a divergent start across the continent.
According to data from IG, the UK’s FTSE 100 is expected to open slightly lower by 6 points at 8,591.
In contrast, Germany’s DAX is projected to gain 40 points to 23,276, France’s CAC 40 is seen rising 5 points to 7,696, and Italy’s FTSE MIB is anticipated to add 26 points to 38,018.
The primary focus for global investors today is the conclusion of the Federal Reserve’s policy meeting, with the interest rate decision scheduled for 2 p.m. ET.
Market expectations, reflected in Fed funds futures trading (CME FedWatch tool), indicate a very low probability (around 3.1%) of an actual interest rate cut at this particular meeting.
However, investors will be dissecting Fed Chair Jerome Powell’s subsequent comments and press conference with keen interest, seeking any nuanced signals about the future path of interest rates and the central bank’s assessment of the US economy amidst ongoing trade policy uncertainties.
Domestically, European markets face another packed day of corporate earnings.
Key reports are due from a wide array of prominent companies, including pharmaceutical giant Novo Nordisk, energy firm Ørsted, jewelry maker Pandora, utility group Veolia, electrical equipment specialist Legrand, automaker BMW, healthcare technology firm Siemens Healthineers, healthcare company Fresenius, construction group Skanska B, pub operator JD Wetherspoon, real estate company Vonovia, retailer Delhaize, and Telecom Italia.
These results will offer crucial insights into corporate health across various sectors. Additionally, regional economic data releases include the latest figures on European retail sales.
Global cues: trade hopes and China stimulus
Overnight, US stock futures saw some support after government spokespeople confirmed that US Treasury Secretary Scott Bessent and top trade official Jamieson Greer would meet with their Chinese counterparts in Switzerland this week.
This news was interpreted as a positive step towards potential de-escalation in trade negotiations following President Donald Trump’s tariff announcements last month, which had sparked market volatility.
Meanwhile, Asian markets, particularly Hong Kong (up over 2%), rallied strongly after China’s central bank and financial regulators announced sweeping plans to cut key interest rates in an effort to bolster economic growth in the face of trade-related headwinds.
Early focus: Novo Nordisk beats Q1 profit, trims full-year guidance
Among the early European earnings reporters, Danish pharmaceutical major Novo Nordisk announced a better-than-expected rise in first-quarter net profit.
The company posted net profit of 29.03 billion Danish kroner ($4.4 billion) for the first three months of the year, surpassing the 27.8 billion Danish kroner forecast by analysts in an LSEG poll.
However, Novo Nordisk simultaneously lowered its full-year sales growth forecast.
This revision was attributed to weaker-than-anticipated demand for its blockbuster Wegovy weight-loss drugs, partly due to increased competition from copycat compounders.
Sales of Wegovy rose 83% annually (at constant exchange rates) to 17.36 billion Danish kroner, slightly below analyst expectations of 18.51 billion (Factset poll).
The mixed results from such a heavily weighted stock will be closely watched as European trading gets underway.
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