European Stocks Open Cautiously as Markets Await Fed Rate Decision

European markets are expected to start the new trading week with mixed performance as global investors await a key policy decision from the U.S. Federal Reserve on Wednesday.

Movements Across Major Indexes

According to data from IG, the U.K.’s FTSE 100 is set to open slightly lower, while Germany’s DAX is expected to rise 0.17%. France’s CAC 40 is projected to edge higher, and Italy’s FTSE MIB is likely to gain around 0.19%.

This week brings no major corporate earnings reports in Europe, though EU trade data will be released on Monday.

In the U.K., the agenda is particularly busy as the country prepares for U.S. President Donald Trump’s state visit. The President and First Lady Melania Trump are scheduled to arrive Tuesday evening, spend Wednesday at Windsor Castle with King Charles and Queen Camilla, and hold talks with Prime Minister Keir Starmer on Thursday. The U.K.’s latest inflation figures will be published Wednesday, just before the Bank of England meets Thursday. Analysts do not expect a rate cut in this session.

Wall Street Awaits Fed Decision

U.S. stock futures were little changed Sunday evening after the Nasdaq Composite closed Friday at a new record high. Investors are now focused on the Fed’s meeting, with expectations of a rate cut aimed at supporting growth amid weakening labor market data and subdued inflation.

According to the CME FedWatch Tool, markets are pricing in a 96.2% chance of a 25 basis point cut, and only a 3.8% likelihood of a larger 50 basis point reduction.

Asia-Pacific Markets Trade Mixed

In the Asia-Pacific region, markets traded mixed overnight as investors closely followed U.S.-China talks in Madrid, Spain.

The U.S. delegation, led by Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer, met with Chinese Vice Premier He Lifeng and top negotiator Li Chenggang. Discussions focused on national security, trade, and economic issues, including the upcoming TikTok divestiture deadline and U.S. tariffs on Chinese goods.

Investor Notes

As global markets await the Fed’s rate decision, investors are advised to keep in mind the following:

Monitor Fed signals closely: A 25 basis point rate cut is highly anticipated, but any deviation from expectations could trigger significant shifts in global capital flows.

Watch U.K. and Eurozone markets: Upcoming inflation and trade data may directly impact the British pound and the euro, influencing European equities.

Track Asia-Pacific developments: U.S.-China talks in Madrid, particularly around tariffs and TikTok, could create volatility in technology and energy stocks.

Manage portfolio risks: In times of heightened uncertainty, diversification is key. Avoid overexposure to sectors that are highly sensitive to monetary policy.

Investor Notes

As global markets await the Fed’s rate decision, investors are advised to keep in mind the following:

Monitor Fed signals closely: A 25 basis point rate cut is highly anticipated, but any deviation from expectations could trigger significant shifts in global capital flows.

Watch U.K. and Eurozone markets: Upcoming inflation and trade data may directly impact the British pound and the euro, influencing European equities.

Track Asia-Pacific developments: U.S.-China talks in Madrid, particularly around tariffs and TikTok, could create volatility in technology and energy stocks.

Manage portfolio risks: In times of heightened uncertainty, diversification is key. Avoid overexposure to sectors that are highly sensitive to monetary policy.