European Shares Seen Lower Before Fed Verdict

European stocks are seen opening on a sluggish note Wednesday as investors fret about a more uncertain rate outlook.

European Central Bank’s Isabel Schnabel on Tuesday highlighted the possibility of growth exceeding expectations in areas such as household consumption, private investment, and government spending, adding she’s comfortable with the next move being higher.

The Federal Reserve is widely expected to lower interest rates by another quarter point later today, but there is considerable uncertainty about the longer-term outlook for rates.

Investors will read between the lines, given conflicting trends of a cooling job market and sticky inflation, as well as gaps in the data from the government shutdown.

According to the CME Group’s FedWatch Tool, there is a 67.5 percent chance the Fed will leave rates unchanged in January.

Fed Chair Jerome Powell’s post-meeting press conference may offer additional clues about the likelihood of further rate cuts.

Asian markets were broadly lower after the release of mixed Chinese inflation data. China’s CPI inflation hit a 21-month high in November while produce deflation persisted, official data showed.

The dollar was muted in Asian trade after a two-day advance and gold was little changed, while oil edged up slightly after falling 3 percent over the previous two sessions.

Overnight, U.S. stocks fluctuated before closing narrowly mixed as the JOLTs survey showed a recovery in vacancies for September and October, and the ADP report revealed that private payrolls increased by 4,750 on average per week in the four weeks ending on November 22, rekindling debate over the path of Federal Reserve interest-rate cuts.

The tech-heavy Nasdaq Composite inched up 0.1 percent while the S&P 500 finished marginally lower and the Dow dipped 0.4 percent.

European stocks closed slightly lower on Tuesday as investors braced for the Fed’s final decision of the year on interest rates.

The pan European Stoxx 600 slid 0.1 percent. The German DAX rose half a percent while France’s CAC 40 shed 0.7 percent and the U.K.’s FTSE 100 finished marginally lower.

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