European Shares Rebound as Oil Price Rally Pauses Ahead of Fed Decision
European shares rebounded from two days of losses on Wednesday as a pause in oil price increases eased pressure on risk assets ahead of the Federal Reserve's policy decision. The pan-European STOXX 600 index rose by 0.4% to 636.81 points, while Germany's DAX also gained 0.4%. Investors were focused on the Fed's move, with a 93% probability of a 25-basis-point interest rate hike.
The oil price rally paused after an unexpected increase in US crude inventories added pressure to prices. Brent crude and US West Texas Intermediate fell as a result, providing some relief to European equities. Banks were among the biggest gainers, with Barclays rising 1.4% and Standard Chartered advancing 1.7%. The two banking stocks had been among the contributors to the STOXX 600's decline to a three-month low in the previous session.
Markets are closely watching the Fed's policy announcement later on Wednesday, with investors assessing not only the expected rate move but also signals on the future path of monetary policy. Rising oil prices and geopolitical disruptions have complicated the inflation outlook. The benchmark US 10-year Treasury yield had moved above 5% on Tuesday, its highest level since 2007, although it eased back below that threshold on Wednesday.