European equity markets rallied on Wednesday ahead of the FOMC policy meeting decisions, the US dollar has remained strong as the USD index is currently trading above the 80.0 area. DAX, CAC and IBEX climbed higher between 0.87% and 1.07%, while London missed the upside trend as the leading index closed fairly unchanged, just below 6,500 points.
On the macroeconomic front, UK employment, German IFO and US Housing data was generally good, giving some upside momentum in Wall Street and the European equity markets. UK unemployment rate fell to 7.4% in Q3 from 7.6%, providing some support to the sterling, which jumped to 1.19 against the dollar. US housing starts in November rose 22.7%, beating analysts’ expectations.
In London, gains in mining stocks outweighed limited losses across financial and banking sectors as risk appetite was limited. Antofagasta and Vedanta climbed higher by 2.05% and 2.04%, respectively, due to firmer base metals prices.
Retail stocks continue to remain under pressure in today’s trading session amid concerns for a slowdown of Christmas shopping this year. Sainsbury, Tesco, Next as well as Marks and Spencer retreated sharply between 1.02% and 3.6%.
Investors’ focus remain on the US FOMC policy meeting amid concerns whether the US Federal Reserve Bank will begin tapering now or wait till early 2014. In anticipation of the FOMC statement later tonight, we expect fairly thin trading volumes in Wall Street, while the US dollar is likely to continue trading sideways around 80.0 level.