European stocks traded modestly higher on Wednesday as investors positioned ahead of several key central bank policy meetings across the region. Softer inflation data provided particular support to U.K. equities.
At 03:05 ET (08:05 GMT), Germany’s DAX rose 0.2%, France’s CAC 40 gained 0.2%, while the U.K.’s FTSE 100 outperformed with a 0.8% advance.
Central bank decisions dominate market focus
Investor attention this week is firmly centered on a series of European central bank meetings, as markets look for clarity on the interest rate outlook heading into the new year.
The European Central Bank is widely expected to keep its key rate unchanged at 2% when it announces its policy decision on Thursday. Recent economic data suggest the eurozone economy has shown more resilience than initially feared.
The 20-nation bloc has weathered the impact of U.S. President Donald Trump’s aggressive trade measures better than expected, partly offsetting export weakness caused by higher U.S. tariffs.
However, signs of slowing momentum have emerged. Business activity growth eased toward the end of the year, with manufacturing contraction deepening and services sector growth losing pace.
Eurozone consumer price inflation data for November is due later in the session, although it is unlikely to significantly influence the ECB’s policy stance.
Elsewhere, Sweden’s Riksbank and Norway’s Norges Bank are also set to deliver their final monetary policy decisions for 2025 this week.
UK inflation drop boosts rate cut expectations
In the U.K., fresh inflation data strengthened expectations for further easing by the Bank of England. Annual consumer price inflation slowed sharply to 3.2% in November from 3.6% in October, marking the lowest level in eight months. On a monthly basis, prices fell 0.2%.
The BoE narrowly voted 5–4 to keep rates unchanged at its last meeting. With inflation cooling, policymakers may now be more inclined to lower borrowing costs to 3.75% from 4%, which would mark the lowest rate since early February 2023.
Corporate updates: Serco raises outlook
On the corporate front, Thyssenkrupp Nucera reported fourth-quarter results largely in line with its November pre-release. Revenue came in slightly ahead of expectations, while earnings were broadly unchanged.
Serco lifted its profit guidance for 2025 and issued a positive outlook for 2026, citing strong performance across its government services operations.
Meanwhile, Bunzl said its adjusted operating profit for 2025 is expected to meet market forecasts, despite ongoing economic challenges in several key markets.
Oil prices jump on Venezuela blockade
Oil prices surged on Wednesday after President Trump ordered a total blockade of all sanctioned oil tankers entering and leaving Venezuela, raising concerns over potential supply disruptions.
Brent crude futures climbed 1.4% to $59.73 a barrel, while U.S. West Texas Intermediate futures rose 1.5% to $55.94 a barrel.
Both benchmarks had fallen to five-year lows in the previous session after signs of progress in Russia-Ukraine peace talks fueled expectations of increased supply and a possible glut next year.
ING analysts noted that Venezuela exported around 600,000 barrels per day of crude in November, warning that shipments are likely to decline following the latest developments. Most of these exports are destined for China.
