European Markets Brace for Mixed Start Ahead of Key Fed Meeting
European stock markets are poised for a mixed opening on Monday as investors remain cautious ahead of the U.S. Federal Reserve’s policy decision scheduled for Wednesday. According to IG data, the U.K.’s FTSE index is projected to open slightly lower, while Germany’s DAX is expected to rise by 0.17%, France’s CAC 40 to see modest gains, and Italy’s FTSE MIB to increase by 0.19%.
Economic and Political Calendar in Focus
Monday brings no major corporate earnings releases in Europe, but EU trade data is due, which may provide further insight into the region’s economic health. The U.K. faces a packed week as it readies for the state visit of U.S. President Donald Trump. Arriving Tuesday evening, Trump and First Lady Melania will spend Wednesday at Windsor Castle with King Charles and Queen Camilla before engaging in talks with Prime Minister Keir Starmer on Thursday.
The U.K. will also release its latest inflation figures on Wednesday, ahead of the Bank of England’s policy meeting on Thursday. The central bank is not expected to reduce interest rates at this session, maintaining a cautious stance amid prevailing economic conditions.
U.S. Market Sentiment and Fed Expectations
U.S. stock futures remained largely unchanged on Sunday night following the Nasdaq Composite’s record close on Friday. Market participants are closely monitoring the Federal Reserve’s upcoming meeting, with recent data indicating a weakening labor market and subdued inflation levels. These factors have intensified speculation that the Fed will implement a quarter-point interest rate cut.
According to the CME FedWatch Tool, the probability of a 25 basis point rate reduction stands at 96.2%, with only a 3.8% chance of a more aggressive half-point cut.
Global Trade Talks Continue Amid Market Uncertainty
Asia-Pacific markets traded mixed overnight amid ongoing U.S.-China negotiations in Madrid. Senior U.S. officials, including Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, met Chinese counterparts Vice Premier He Lifeng and top trade negotiator Li Chenggang. Discussions focused on critical national security, economic, and trade issues, notably the looming deadline for the divestment of Chinese short video app TikTok and the status of U.S. tariffs.
FinOracleAI — Market View
The upcoming Federal Reserve meeting is the primary catalyst influencing short-term market direction, with high expectations for a modest rate cut fueling cautious optimism. European markets are likely to remain subdued ahead of this decision, balanced by geopolitical events such as President Trump’s UK visit and ongoing US-China trade talks. Key risks include potential deviations in Fed policy and unexpected developments in trade negotiations. Investors should closely monitor Fed communications and economic data releases this week for clearer market signals.
Impact: neutral
