European stock markets extended their winning run on Wednesday, rising for a third consecutive session as falling oil prices and an improved global risk appetite — partly driven by a bullish outlook from NVIDIA — lifted sentiment ahead of a closely watched Federal Reserve interest-rate decision.
The pan-European STOXX 600 index climbed 0.5% to 605.59 points, its strongest one-month performance, according to Financial Mirror. Financial stocks provided the biggest positive contribution to the index, offsetting a 0.3% decline in the energy sector, which snapped an eight-day winning streak.
"European stock markets continued to climb on Wednesday, with investors feeling more optimistic as oil prices dropped, due to easing supply concerns," said MarketPulse analyst Zain Vawda.
Oil Prices Pull Back
Crude prices retreated sharply after several days of elevated levels. Brent futures fell 1.46% to $101.91 per barrel, while West Texas Intermediate (WTI) dropped 2.86% to $93.46. As Vawda noted, "While the ongoing Iran conflict has kept Brent futures above $100 for several days, prices finally retreated on Wednesday."
Two factors weighed on oil: the restart of crude exports from Iraq's Kirkuk fields to Turkey, following an agreement between Baghdad and the Kurdistan Regional Government — with Iraq targeting at least 100,000 barrels per day through the pipeline — and American Petroleum Institute (API) data showing US crude stockpiles rose by more than 6.5 million barrels.
Asian Markets and Currencies
Gains were not confined to Europe. Japan's Nikkei surged 2.87% to 55,239.4, ending a four-day losing streak, while the broader Topix rose 2.49% to close at 3,717.41.
In currency markets, the US dollar weakened for a third straight session, with the DXY dollar index slipping 0.04% to 99.51. The euro rose to $1.1543, the Japanese yen strengthened to 158.64 per dollar, sterling advanced to $1.3368, and the Australian and New Zealand dollars reached $0.7117 and $0.5868 respectively.
Spot gold edged up 0.1% to $5,008.58, with US gold futures also adding 0.1% to reach $5,012.60. In crypto markets, Bitcoin dipped 0.50% to $74,184.63, while Ethereum was nearly flat, rising 0.04% to $2,329.46.
All Eyes on the Fed
Markets are now focused on the Federal Reserve's rate-setting meeting, where policymakers are widely expected to hold interest rates steady. The key signal investors will watch is the Fed's dot plot of rate projections. "If the median forecast shifts from one cut to zero, the US dollar will likely see a boost," Vawda noted.
On Fed Chair Jerome Powell's expected remarks, the analyst added: "Chair Jerome Powell is unlikely to give firm guidance on how the Middle East conflict affects inflation and growth, as commodity markets remain too volatile."
