European stocks pushed higher on Wednesday as investors awaited a widely anticipated decision by the US Federal Reserve on interest rate policy.
In London, the FTSE 100 (^FTSE) rose 1.3% after opening, while the CAC (^FCHI) gained 2.1% in Paris, and the Frankfurt DAX (^GDAXI) was 2% higher.
“All eyes are firmly focused on the Federal Reserve meeting later today – the first in four years, where an interest rate hike is expected,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said.
“Should this fail to materialise, further volatility across European and the UK market should be expected. It’s also worth keeping in mind the Russian invasion of Ukraine means the frequency and extent of rate rises may not be as high as previously predicted.”
The positive mood also comes amid fresh signs that a negotiated deal to end the conflict in Ukraine may be a step closer.
Meanwhile, traders will also be keeping their eyes on the prospect that Russia might default on a bond payment.
A $117m (£90m) interest payment is due on a US dollar bond, which Russia has said it will pay in roubles – this would start the clock ticking on a potential default. However, it will still have a 30-day grace period to make the coupon payments.
Read more: Bank of England set to raise interest rates for third time since pandemic
In the US, S&P 500 futures (ES=F) were up 0.9%, Dow futures (YM=F) rose 0.7%, and Nasdaq futures (NQ=F) were 1.3% higher as trade began in Europe.
On Tuesday, US markets managed to finish the session sharply higher, with the S&P 500 finishing ahead for the first time since last Wednesday.
Later in the session, the latest US retail sales report for February will be revealed. Expectations are for sales to rise by 0.4% in February.
US retail sales saw a big rebound in January after a decline of 1.9% in December. January retail sales showed that, despite weak consumer confidence, spending rebounded at its fastest rate in 10 months, rising by 3.8%, well above expectations of 2%.
The biggest gains were in online sales, as well as furniture, autos and building materials.
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Asian shares rose on Wednesday, with the Nikkei (^N225) climbing 1.6% in Japan, while the Hang Seng (^HSI) rocketed more than 9% in Hong Kong after plunging earlier in the week, and the Shanghai Composite (000001.SS) climbed 3.5%.
The rally came after Beijing pledged policies to boost financial markets and stimulate economic growth.
Watch: How does inflation affect interest rates