London

European Markets Close Higher as Investors Focus on Fed Decision

Jerome Powell
Al Drago | Bloomberg | Getty Images
  • Investors are focused on central bank action this week with the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank all due to announce monetary policy decisions.
  • The U.K. Consumer Price Index rose by 5.1% in the 12 months to November, up from 4.2% in October, the steepest incline for a decade and more than double the Bank of England's target.

LONDON — European stocks closed higher on Wednesday as investor focus turned to the Federal Reserve's latest monetary policy decision.

The pan-European Stoxx 600 added 0.3% by the close, with tech stocks gaining 1.4% while retail slid 1.7%.

Investors are focused on central bank action this week with the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank all due to announce monetary policy decisions.

The Office for National Statistics on Wednesday said the U.K. Consumer Price Index rose by 5.1% in the 12 months to November, up from 4.2% in October, the steepest incline for a decade and more than double the Bank of England's target.

The Federal Reserve's two-day policy meeting, where policymakers were expected to discuss speeding up the end of its bond-buying program, concludes on Wednesday.

The central bank will release a statement on Wednesday with quarterly projections for the economy, inflation and interest rates. Chairman Jerome Powell will also hold a press conference.

Investors will be watching closely for commentary around whether the Fed plans to accelerate the end of its bond-buying program. At present, the central bank's asset purchase program will end in June 2022, but several officials have spoken about ending the purchases sooner.

The latest CNBC Fed Survey showed that investment professionals and economists expect the Fed to wind down its asset purchases by March and begin rate hikes in June.

U.S. stocks dipped on Wednesday morning as investors readied for Wednesday's highly anticipated Fed decision.

In Asia-Pacific markets overnight, mainland Chinese markets declined while Hong Kong stocks led losses, as investors digested key Chinese economic data. That included industrial output for November, which was up 3.8% year-on-year, more than the 3.5% increase in October, and better than the 3.6% expected in a Reuters poll.

Data also showed that retail sales in November rose 3.9% year-on-year, less than October's 4.9% increase, and below the expectations of 4.6% in a Reuters poll.

Investor sentiment is set to remain cautious after the World Health Organization on Tuesday warned the new Covid omicron variant is spreading faster than any previous strain, saying that the variant is probably present in most countries of the world.

The U.K. reported a record number of new daily Covid-19 cases on Wednesday, with 78,610 in the last 24 hours.

The figure was an increase from 59,610 the day before, and it surpasses the previous high of 68,053 cases reported on Jan. 8.

In terms of individual share price movement on Wednesday, Irish support services firm DCC climbed 8.9% after acquiring U.S. appliances and electronics company Almo Corporation, prompting JPMorgan to raise DCC's target price.

At the bottom of the European blue chip index, Belgian retail group Colruyt tumbled 9% as investors balked at its first-half results.

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- CNBC's Jesse Pound, Weizhen Tan and Pippa Stevens contributed to this market report.

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