European Stocks Hold Steady as Investors Await Fed Rate Decision and U.S. Tech Earnings

European stock markets traded mixed on Wednesday as investors stayed cautious ahead of a highly anticipated Federal Reserve interest rate decision and a busy day of corporate earnings.

At 08:05 GMT, Germany’s DAX slipped 0.1%, France’s CAC 40 fell 0.2%, while the U.K.’s FTSE 100 edged 0.4% higher. The muted tone reflected investors’ reluctance to take fresh positions before the U.S. central bank’s policy announcement later in the day.

The Fed is expected to cut interest rates by 25 basis points, bringing the target range to 3.75%–4.00%, according to the CME FedWatch Tool, which places the probability of such a move at 96%. With much of the outcome already priced in, traders are now focused on Fed Chair Jerome Powell’s remarks for clues about the future path of monetary policy, especially amid the ongoing U.S. government shutdown, which has disrupted the flow of key economic data.

Investors are also watching for signals on whether the Fed will finally declare an end to its quantitative tightening program, a measure that has gradually reduced the size of the central bank’s balance sheet.

U.S.–China Relations Show Signs of Thawing

Global sentiment received a mild boost from easing trade tensions between the United States and China. U.S. President Donald Trump said he plans to reduce tariffs linked to fentanyl-related trade restrictions during an upcoming meeting with Chinese President Xi Jinping in South Korea on Thursday.

Trump imposed a 20% tariff earlier this year, accusing China of failing to curb illegal fentanyl exports to the U.S. His latest comments suggest a willingness to de-escalate trade frictions ahead of further negotiations.

The U.S. president also confirmed plans to discuss Nvidia’s AI technology, including its Blackwell chip, during the bilateral meeting, a topic likely to influence broader sentiment around the global semiconductor industry.

Corporate Earnings Take Center Stage

Earnings season remains in full swing, with several major players releasing results that are shaping regional sentiment.

UBS reported a 74% jump in third-quarter profit, outperforming expectations as higher volatility in global markets boosted trading revenue. Deutsche Bank also posted a record pre-tax profit, up 8% year-on-year, thanks to strong fixed-income trading and strict cost controls.

In southern Europe, Banco Santander recorded a 7.8% increase in net profit, with solid performance in its U.S. division helping to offset weaker lending income and ongoing challenges in Brazil.

However, not all corporate news was upbeat. Mercedes-Benz said its quarterly operating profit fell by more than two-thirds, pressured by large redundancy payouts and slowing demand in key markets like China and the U.S. Meanwhile, Adidas reported slower sales growth in North America, marking the weakest performance among its regional markets.

In the energy sector, Equinor posted a 9.9% decline in quarterly profit due to weaker oil and gas prices, though the Norwegian energy company maintained its full-year production outlook.

U.K. pharmaceutical giant GSK lifted its 2025 sales forecast after reporting double-digit growth in its HIV and oncology divisions, highlighting the strength of its specialty medicines portfolio.

Across the Atlantic, investors are also gearing up for a heavy lineup of U.S. tech earnings, with Alphabet, Meta Platforms, and Microsoft all set to report after Wednesday’s market close. The sector faces mounting pressure to deliver strong results following a year of high valuations and investor expectations.

Oil Prices Stabilize as U.S. Inventories Fall

In the commodities market, crude oil prices steadied after two consecutive sessions of declines, supported by a larger-than-expected drop in U.S. inventories.

Brent crude inched down 0.1% to $63.76 per barrel, while West Texas Intermediate (WTI) was little changed at $60.14. Data from the American Petroleum Institute (API) showed U.S. crude stocks fell by more than 4 million barrels in the week ending October 24, while gasoline inventories dropped by 6.35 million barrels, signaling robust demand.

The drawdown helped offset concerns that OPEC+ could increase production as early as December, a move that had weighed on sentiment earlier in the week.

Focus Shifts to Powell’s Guidance

With the rate cut already priced into global markets, investors are bracing for Jerome Powell’s post-meeting comments, which could determine the direction of the dollar, Treasury yields, and equity markets heading into November.

A cautious tone from the Fed may keep European equities range-bound, while dovish language hinting at further rate cuts could fuel a relief rally. On the other hand, any signal of hesitation toward future easing may dampen risk appetite in the near term.