European stock markets spent most of Wednesday muted as UK house prices rose in January and traders awaited the latest interest rate decision from the Federal Reserve.
The FTSE 100 (^FTSE) was trading 0.1% lower by the end of the day in London, while the CAC (^FCHI) lost 0.1% in Paris, slipping from its record high, and the Frankfurt DAX (^GDAXI) was 0.3% down.
“Ricardo Evangelista, senior analyst at ActivTrades, said: “Traders find themselves in a wait-and-see mode in anticipation of the Federal Reserve’s rates announcement and subsequent press conference, both scheduled for later today.
“While the consensus amongst analysts leans towards unchanged interest rates, uncertainties persist regarding the hints that may surface in the policy statement and during the press conference.”
It came as Nationwide’s House Price Index showed there was a slight improvement in the annual rate of house price growth in the UK, from -1.8% in December to -0.2% in January.
Prices ticked up 0.7% to an average of £257,656 as pressures on mortgage rates eased, following an optimistic shift in how investors view the Bank of England‘s potential interest rate path, the building society said.
Robert Gardner, Nationwide’s chief economist, said: “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”
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Across the pond, US markets were also in the red, with the Nasdaq 100 (^IXIC) sliding back 1.4%, the S&P 500 (^GSPC) 0.8% down by the time of the European close, and the Dow (^DJI) trading flat.
It came as private sector hiring in the US fell more than expected this month. There were 107,000 added jobs in the private sector, according to data from payroll business ADP, a slowdown from a revised 158,000 in December.
Most of the job gains were in service-providing sectors including leisure and hospitality and trade, transport and utilities.
Michael Hewson of CMC Markets said: “Having seen the ECB keep rates on hold last week, today is the turn of the Federal Reserve where we could see the central bank look to put a pin in the idea that a March rate cut is coming. That’s not to say the Fed will rule the idea of rate cuts coming, simply that March is too soon for a data dependant central bank.”
Futures expect 150bps of cuts from the Fed this year.
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