Europe’s markets slip amid cautious trading before US and UK rate decisions

Europe’s biggest markets closed in the red on Wednesday amid caution before key interest rate decisions.

The markets closed before the US Federal Reserve revealed its latest decision on interest rates, amid expectations that it will start to soften its appetite for hikes.

On Thursday, the Bank of England is also expected to deliver a 0.5 percentage point interest rate increase, which would still take rates to a 14-year high of 3.5%.

The FTSE 100 finished the day down 6.96 points, or 0.09%, at 7,495.93.

Across the channel, the Dax declined 0.26% by the end of the session and the French Cac finished 0.21% lower.

In the US, the main markets made a nervous start but inched higher in anticipation of the Fed decision later on Wednesday evening.

Michael Hewson, chief market analyst at CMC Market UK, said: “European markets have undergone a rather subdued session ahead of tonight’s Fed rate decision, where it’s widely expected we’ll see a downshift to a 50bps (basis points) rate hike, as inflationary pressures subside.”

Meanwhile, sterling benefited from weakness in the dollar and positivity surrounding a sharper-than-expected slowdown in UK CPI inflation, which dipped to 10.7% in November, according to the latest figures from the ONS.

The pound was up 0.28% against the dollar at 1.240, and was 0.16% higher against the euro at 1.164 at the close.

In company news, travel firm Tui lost altitude on Wednesday despite swinging back to profit on the back of rebounding summer holiday trips.

The company reported revenues of 16.55 billion euros (£14.24 billion) in the year to September 30, up from 4.73 billion (£4.07 billion) the previous year, after it was buoyed by the easing of pandemic restrictions.

Nevertheless, shares fell 11.8p to 135.85p as a result of plans to raise more funds to repay state aid to the German government.

Watches of Switzerland dipped in value despite the luxury watch retailer maintaining its guidance for the rest of the financial year as it saw sales jump for the past six months.

Shares dipped by 51p to 908p at the close of play after the retailer recorded a slight decrease in profit margins and cash flow for the half-year.

BT was among the days top performers as the telecoms firm as it rebounded from the two-year lows it struck on Tuesday.

Shares improved by 2.35p to 116.25p after the firm announced a five-year deal with Nokia to help deliver efficiency improvements, while new pricing for its Openreach unit could help boost earnings.

The price of oil continued its recent positive trajectory after the IEA warned that prices were likely to rise next year as sanctions further squeeze Russian supply and demand picks up further in China.

Brent crude oil increased by 1.88% to 82.2 US dollars per barrel when the London markets closed.

The biggest risers in the FTSE 100 were BT Group, up 2.35p at 116.25p, Centrica, up 1.46p at 91.98p, Admiral, up 33p at 2,085p, BAE Systems, up 13.2p at 834.2p, and Compass, up 26p at 1,925p.

The biggest fallers of the day were Airtel Africa, down 3.5p at 113.9p, IAG, down 3.96p at 131.28p, Anglo American, down 72.5p at 3,132.5p, Rio Tinto, down 125p at 5,622p, and Taylor Wimpey, down 1.95p at 102.25p.