LONDON — European markets were cautiously higher on Wednesday as investors looked ahead to the latest monetary policy decision from the U.S. Federal Reserve.
The pan-European Stoxx 600 added 0.2% in early trade, with banks climbing 1.5% to lead gains while basic resources slid 0.9%.
Global investors are focused today on the Fed’s forthcoming monetary policy decision, due to be announced Wednesday following a two-day meeting. Markets are widely anticipating a second consecutive 75 basis point hike to interest rates.
Like many central banks around the world, the Fed is acting aggressively to rein in inflation against a backdrop of slowing economic activity.
Concerns for the global economy deepened on Tuesday after the International Monetary Fund cut its global growth projections for 2022 and 2023, dubbing the world’s economic outlook “gloomy and more uncertain.”
The IMF now expects the global economy to grow 3.2% this year, before slowing further to a 2.9% GDP rate in 2023. The revisions mark a downgrade of 0.4 and 0.7 percentage points, respectively, from its April projections.
On the data front, German consumer sentiment is projected to slide to a record low in August as fears about diminishing gas supplies compound pressures from supply chain issues and the war in Ukraine.
The GFK institute’s consumer sentiment index dropped to -30.6 points heading into August, below the previous record low of -27.7 at the start of July.
Earnings in focus
Credit Suisse announced that CEO Thomas Gottstein would step down as the bank reported a massive second-quarter loss, as poor investment bank performance and mounting litigation provisions hammered earnings.
The embattled Swiss bank posted a net loss of 1.593 billion Swiss francs ($1.66 billion), far below consensus expectations among analysts for a 398.16 million Swiss franc loss.
Gottstein, who took the reins in early 2020 following the resignation of predecessor Tidjane Thiam after a spying scandal, will be replaced by Ulrich Koerner, previously CEO of the bank’s asset management division.
Credit Suisse shares added 0.7% in early trade.
The German lender exceeded consensus expectations among analysts aggregated by Refinitiv of a 960.2 million euro profit, and vastly improved on the 692 million euro profit for the same period last year.
Despite the positive result, Deutsche Bank shares slipped 2% in early deals.
At the bottom of the Stoxx 600, Luxembourg-based laboratory group Eurofins Scientific fell more than 8% after its earnings report.
At the top of the index, French fiber optic cable company Nexans gained more than 7% after strong first-half results.
(With Inputs from cnbc)
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