European stocks open higher as global markets anticipate Fed rate cut

LONDON — European stocks opened mostly higher as markets awaited the latest monetary policy decision by the U.S. Federal Reserve, which is expected to lower interest rates on Wednesday.

The pan-European Stoxx 600^[1] was trading 0.2% higher at 9:08 a.m. in London (4:08 a.m. ET), with most sectors in positive territory. Among major regional bourses, Germany’s DAX^[2] index led the gains with a 0.5% jump.

British grocery giants Marks & Spencer^[3] and Sainsbury’s^[4] rose to the top of the Stoxx 600 in early trade, adding 3.2% and 2.9%, respectively.

The latest U.K. inflation figures^[5] showed on Wednesday that annual price growth held steady at 3.8% in August. The print also revealed that food prices had risen to 5.1% on an annualized basis in August, while alcohol and tobacco prices hit 5.9%.

Sainsbury’s shares were also extending gains that began on Monday after the company ended talks to sell its Argos brand^[6] to China’s JD.com.

Meanwhile, defense stocks were also on the rise, with the Stoxx Aerospace and Defense index gained 0.3% in early trade.

On Tuesday, it was reported^[7] that Indian troops had joined a military drill with Russian and Belarusian forces near Minsk, days after Russian drones entered Polish^[8] and Romanian^[9] airspace.

Germany’s Rheinmetall^[10] and Hensoldt^[11] gained 2.5% and 1.9%, respectively, while Sweden’s Saab^[12] was up by 2.3%.

Global markets are also focused on the Fed today with the central bank widely expected to cut interest rates by 25 basis points, according to the CME’s FedWatch tool^[13].

Policymakers will also share more insight into their outlook for rates over the next year or so in the closely-watched “dot plot” grid that accompanies their quarterly Summary of Economic Projections.

European markets moved lower on Tuesday as investors assessed developments in the U.S.-China trade talks that took place in Madrid earlier this week.

U.S. Treasury Secretary Scott Bessent told CNBC on Tuesday that he expected further trade discussions^[14] between Washington and Beijing to take place before punitive tariffs are set to take hold in November.

“We’ll be seeing each other again,” Bessent said. “Each one of those talks has become more and more productive. I think the Chinese now sense that a trade deal is possible.”

Tariffs rolled out by U.S. President Donald Trump in April would have seen 145% duties slapped on Chinese imports into the U.S., but these were delayed to allow for trade negotiations, with a deadline currently set for Nov. 10.

In other news, Trump’s state visit to the U.K. is in full swing on Wednesday, with the president and his wife, Melania, spending the day at Windsor Castle with King Charles and Queen Camilla before holding talks with U.K. Prime Minister Keir Starmer on Thursday.