European Midday Briefing

MARKET WRAPS

Stocks:

European stocks rose modestly on Wednesday, with investors readying for the latest Federal Reserve policy decision and after data showed U.K. inflation slowed unexpectedly.

The consumer price index rose 6.7% on year in August, slowing from 6.8% in July, with the core CPI rate decelerating to 5.9%. The surprise fall in inflation gives the Bank of England more room to maneuver ahead of its interest-rate decision on Thursday.

. "The odds of a rate hike by the BOE tomorrow are still high, but policymakers may signal that they believe this could be the last hike," Moneyfarm said.

However, AJ Bell said that with growth sluggish and high interest rates taking their toll, the BOE could at least skip a rate hike this month.

Read Surprise Fall in UK Inflation Offers Bank of England Breathing Space

Read the market, analyst reactions to the data

U.S. Markets:

Markets were subdued, with equity-index futures, benchmark Treasury yields and the dollar index all little changed.

All eyes will be on new economic forecasts that include the Fed's "dot plot," plus Jerome Powell's press conference. Investors are looking for clues on the prospect for rate cuts in 2024.

Stocks to Watch

Ford reached a tentative labor deal with Canadian union Unifor, avoiding what could have been a second strike at its operations in less than a week. Ford shares edged up premarket.

Instacart shares fell 4.9% ahead of the bell. They rose 12% in their trading debut on Tuesday, another promising sign for a reawakening IPO market.

General Mills is due to post quarterly earnings ahead of market open, while FedEx results are due after the close.

Follow WSJ markets coverage here .

Forex:

Sterling fell to a near four-month against the dollar, while EUR/GBP rose to its highest in around six weeks, as U.K. inflation came in at a lower level than expected ahead of the Bank of England's rate decision on Thursday.

"The surprise fall in U.K. inflation triggered a kneejerk selloff in sterling, as today's data cements the expectation that the Bank of England's next rate hike could also be its last," Swissquote Bank said.

The dollar could rise if the Federal Reserve hints that rates could increase further, UniCredit Research said.

The decision shouldn't dent dollar strength and "might even lift it a little further" if Jerome Powell "leaves the door open for another hike by the end of the year."

This could lift the DXY dollar index further beyond 105 and potentially drag EUR/USD below 1.0633, UniCredit said.

Bonds:

Greek government bonds are supported by strong macroeconomic and fiscal fundamentals, stable political landscape and the recent rating upgrade to investment grade from DBRS, "which might be followed by other rating agencies by end of 2023," J.P.Morgan said.

It has a broadly constructive medium-term outlook on the bonds.

Read Greek Bond Auction an Opportunity to Get Into Index Inclusion Trade

Energy:

A steep rally for oil prices halted in early trading, with Brent falling more than 1%, as investors awaited the conclusion of the latest Fed meeting.

The speed of Brent's rally, which had seen it gain almost 27% from its June low to Tuesday's peak, has surprised some analysts who expect profit-taking to set in.

"The crude market is heavily overbought and in need of consolidation," Saxo said. "Chatter on $100 [a barrel] oil continues to pick up, but we have little conviction that it would be sustainable."

Metals:

Base metals were mixed and gold edged down as the Fed decision neared.

Few are expecting the Fed to alter interest rates at the end of their meeting, but a recent rise in energy prices has raised fears the central bank could opt to keep rates higher for longer.

"The impact of better-than-expected economic data [on metals prices] last week has petered out as the focus returns to central bank policies, " ANZ said.

Read More Iron Ore Gains Hinge on Steel Rebound

DOW JONES NEWSPLUS

EMEA HEADLINES

AstraZeneca's Rare-Disease Unit Buy Pfizer Portfolio for $1 Bln

AstraZeneca's rare-disease unit Alexion has completed a purchase and license agreement for early-stage rare-disease gene therapy portfolio from Pfizer for a total consideration of $1 billion, the Anglo-Swedish pharma giant said Wednesday.

"These new resources will build on the combined capabilities of Alexion and AstraZeneca in genomic medicine, with the objective to develop new genetic therapies with improved safety and efficacy profiles," it said.

Pearson Names Omar Abbosh as Incoming CEO

Pearson said it has appointed Omar Abbosh as its new chief executive officer, effective early 2024 and succeeding current CEO Andy Bird, who has decided to retire.

The FTSE 100-listed education company said Wednesday Abbosh has more than 30 years of experience in enterprise technology with multinational companies.

Britain's Pitch to Investors: We're Boring Now-and That's Good

LONDON-It isn't a political slogan that would win many votes: Make Britain Boring Again.

But for the first time in nearly a decade-after nonstop drama from Brexit to the colorful antics of Boris Johnson-politics in Britain is eliciting yawns rather than headlines. And that's good news for the world's sixth-biggest economy.

GLOBAL NEWS

China Keeps Benchmark Lending Rates Unchanged

China's benchmark lending rates were kept unchanged, as expected, following a hold of policy rates earlier this month, after a run of upbeat August data showed signs of stabilization in the world's second-largest economy.

The one-year loan prime rate was held steady at 3.45% while the five-year LPR was unchanged at 4.2%, the People's Bank of China said Wednesday. The loan prime rates are calculated monthly based on the interest rates that 18 designated commercial banks charge their best clients.

Beijing Touts China's Economic Resilience, Hits Back at Negative Comments

China's top economic policy makers on Wednesday struck back against widespread pessimism about the country's growth trajectory as Beijing sought to boost business confidence amid persisting headwinds.

In response to recent bearish comments on China's economy, Cong Liang, a senior state planner, said at a press briefing that such negative remarks were never realized in the past and wouldn't materialize this time.

Ukrainian Tactics Put Russia on the Defensive in the Black Sea

ODESA, Ukraine-Commercial vessels have resumed using Ukraine's main port of Odesa without asking permission from Russia for the first time since the war began-showing just how much the balance of power has changed in the Black Sea.

By imposing an asymmetrical war that relies on domestically produced naval drones and missiles, and that targets Russians ships in their own home bases, Ukraine has eroded much of Russia's vaunted naval superiority. Now, it is taking the battle to Russia itself.

Biden, Zelensky Urge U.N. Members to Stand Up Against Russian Aggression

UNITED NATIONS-President Biden and Ukrainian President Volodymyr Zelensky called on their counterparts to defend the idea that powerful nations can't seize territory from their neighbors, part of a broad appeal aimed at isolating Russia on the world stage.

In an address to the U.N. General Assembly on Tuesday, Biden said if the U.N. abandoned its principles "to appease an aggressor, can any member state in this body feel confident that they're protected?"

Write to [e-mail]

Write to us at [e-mail]

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to https://newsplus.wsj.com/subscriptions.

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

09-20-23 0538ET