European stocks head for higher open as markets prepare for Fed update
European stocks are expected to open higher on Wednesday as global investors await the outcome of the latest meeting of the U.S. Federal Reserve and as tensions ease over embattled Chinese property developer Evergrande.
Britain’s FTSE is seen opening 16 points higher at 6,985, Germany’s DAX 52 points higher at 15,364, France’s CAC 40 up 28 points at 6,566 and Italy’s FTSE MIB 11 points higher at 25,059, according to IG.
Top of the agenda for investors on Wednesday is the conclusion of the U.S. Federal Reserve’s highly anticipated September meeting with investors looking out for any indications about the Fed’s tapering of its easy monetary policy.
The Fed will release a policy statement with economic and interest rate forecasts, then Chairman Jerome Powell is expected to speak to the media at 2:30 p.m. ET. Powell has said previously that tapering could occur this year, but investors are waiting for more details, particularly after mixed economic data released since Powell’s last comments.
European markets saw a solid rebound on Tuesday after a nervous start to the week, largely caused by investor fears surrounding embattled property developer China Evergrande Group and concerns about the contagion risk for the wider Chinese and global economy.
Investor sentiment may have been soothed on Wednesday after Evergrande unit Hengda announced it will make a coupon payment on its domestic bonds on Thursday. Still, questions remain over whether the interest on Evergrande’s offshore U.S.-dollar denominated bond — also due Thursday — will be made.
That could be the reason behind caution in the U.S. and Asia-Pacific markets overnight; U.S. stock futures opened slightly lower Tuesday night and Asia-Pacific markets are mixed, with investors keeping a close watch on China markets, which reopened for trade on Wednesday after a two-day holiday. Markets in mainland China fell more than 1% on Wednesday’s open before bouncing back slightly.
Read more: The global economy could feel the effects of China’s Evergrande crisis. Here’s what investors should know
Key data releases also on the agenda for Europe include flash consumer confidence data for the euro zone in September, Italian industrial sales figures for July and Dutch consumer spending numbers for July. There are no major earnings releases Wednesday.
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-CNBC’s Tanaya Macheel and Eustance Huang contributed reporting to this story.