Healthcare companies such as GSK plc and tech companies such as Siemens AG were among the top losers on European markets on Wednesday morning.
ADVERTISEMENTEuropean markets continued to lag on Wednesday afternoon, as investors eyed the upcoming US Federal Reserve interest rate decision due later in the day. Escalating geopolitical tensions, especially in the Middle East also impacted markets.
Britain’s FTSE 100 was 0.1% lower on Wednesday at 3pm GMT, with Compass Group plc, Fresnillo and GSK plc emerging as some of the main losers.
Germany’s DAX index also dropped 0.5% at around the same time, pulled down by Rheinmetall AG, Bayer and BASF.
On the other hand, France CAC 40 index rose 0.6% at around 4pm CET on Wednesday, while the STOXX 600 index was also up 0.1%.
Tensions in the Middle East have been heating up, with Israel launching its worst strike on Gaza since its ceasefire agreement with Hamas back in mid-January this year.
Russian prime minister Vladimir Putin, meanwhile, dashed hopes of a Russia-Ukraine peace deal. He revealed that while he would stop attacks on Ukrainian energy sites, he would not be agreeing to the 30-day ceasefire suggested by the US.
Markets were also jittery following US president Donald Trump’s reiteration that sectoral and reciprocal tariffs will come into effect on 2 April.
Kyle Chapman, FX markets analyst at Ballinger Group, nonetheless says that markets will be taking a break from trade policy and geopolitics ‘to digest a series of central bank decisions over the next couple of days.”
“I suspect Powell would prefer to skip today's rate decision given the impossible job of creating economic projections in this environment,” he continued.
Asia-Pacific markets overnight
Japan’s benchmark Nikkei 225 closed around 0.3% lower on Wednesday, at 37,751.9, as the Bank of Japan ended up holding interest rates as expected by the market.
Pantheon Macroeconomics said in a note: “Externally, the committee is wary of what President Trump may do in early April, when reciprocal tariffs are proposed- with Japan likely to be a target- and has preferred to hold fire until more clarity emerges.”
“Indeed, the BoJ in its policy statement today newly highlighted ‘high uncertainties’ surrounding growth and prices, including the ‘evolving situation regarding trade and other policies in each jurisdiction’. So far, developments suggest Japan is unlikely to secure a tariff reprieve from the US, and the stakes are high.”
China’s Shanghai Composite Index slid 0.1% to 3,426.4 on Wednesday as stocks pulled back from a recent tech and stimulus-drivel rally. Increasing calls to cut China’s access to US chips also dampened markets.
Hong Kong’s Hang Seng index inched up 0.1% to 24,771.1 on Wednesday morning.
Australia’s S&P/ASX 200 index closed 0.4% lower at 7,828.3 on Wednesday, whereas South Korea’s Kospi index rose 0.6% to 2,628.6.
ADVERTISEMENTUS markets open
US markets opened optimistic on Wednesday, as investors eyed the upcoming Federal Reserve interest rate decision.
The S&P 500 inched up 0.6% on Wednesday morning, boosted mainly by car stocks such as General Motors and Chevron. The tech-heavy Nasdaq 100 rose 0.8%, supported by companies like MicroStrategy and AppLovin. The Dow Jones Industrial Average Index also advanced 0.5%.
The Federal Reserve is widely expected to keep interest rates steady at its March meeting, having delivered its last cut in December. The central bank is estimated to opt for a cautious policy stance, as geopolitical tensions and economic uncertainty continue to weigh on sentiment.
This is especially as Trump’s tariffs could cause certain product prices to spike, which could derail the Federal Reserve’s progress in taming inflation so far. If so, this may mean that the central bank cuts rates more slowly.
ADVERTISEMENTThe Federal Reserve will also reveal new economic projections for interest rates, gross domestic product (GDP) growth, unemployment and inflation at its March meeting.
Commodities and currencies
In commodities, US crude oil rose 0.1% to $66.9 per barrel on Wednesday afternoon, with Brent crude oil also dipping 0.2% to $70.6 per barrel.
Gold pulled back slightly on Wednesday afternoon, dipping 0.1%, but was still hovering near record highs at $3,027.4 per ounce. Investors flocked to the safe haven asset amid escalating geopolitical tensions, especially in the Middle East.
The EUR/USD pair lost 0.5%, whereas the EUR/GBP pair advanced 0.3%.
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