- Stock markets gained on Wednesday ahead of the Federal Reserve's keenly awaited meeting, as markets expect a 25bps rate hike.
- A semblance of progress in Russia-Ukraine talks gave rise to some optimism that a ceasefire may be possible.
- Oil rose, paring some of its recent losses driven by concern over a rise in Chinese Covid cases.
Global stocks rose on Wednesday ahead of a widely expected interest-rate rise from the Federal Reserve, while apparent progress in diplomatic talks between Russia and Ukraine also boosted sentiment.
The Fed is widely expected to raise interest rates by 25 basis points following a two-day meeting. This would be its first rate rise since 2018. Investors will scour the post-meeting statement to gauge the likely outlook for interest rates as the Fed grapples to tame inflation at 40-year highs, soaring energy and raw material prices and possible economic slowdown as a result.
"It's not the (fully expected) rate hike that counts, but whether we see any significant changes in the dot plot or economic forecasts, as that will reveal whether markets are right to price in so many hikes this year," said Matt Simpson, Senior Market Analyst at City Index.
More positive signs emerging from peace talks between Russia and Ukraine contributed to pushing stocks up. Ukrainian president Volodymyr Zelenskyy said talks with Russia looked more realistic, with a meeting between the two neighbouring countries on Wednesday.
"Sentiment had another spring in its step today after a positive lead from Wall Street, as ongoing peace talks provided glimmers of hope the war may wind down," Simpson said.
Fears over hawkish rate hikes from the Fed and escalating geopolitical tensions from the Russia-Ukraine conflict had caused major volatility in the markets. Hopes of further clarity and positive news pushed the markets up.
US futures were up on Wednesday, with futures on theS&P 500 gaining 1.15%, futures onDow Jones up 0.93%, and Nasdaq futures rising 1.80%.
European stocks also rose. The FTSE 100 was up 1.15%, with the Stoxx 600 climbing 2.18%. The French CAC 40 jumped 2.68% and the German DAX rose 2.53%.
Brent crude oil pared earlier gains, easing 0.1% to $99.80 a barrel, while WTI crude oil fell 0.3% to $96.14. The price of oil hit its highest in 14 years last week, driven by fears of an irreplaceable gap in global supply, should Western nations ban Russian energy exports.
So far, other than the US and the UK, which account for only a small proportion of Russia's oil and gas exports, no other country has followed suit in imposing restrictions. However, a surge in cases of Covid-19 in major Chinese cities this week has fueled concern about the impact on demand in the world's biggest commodities importer.
Gold, a traditional safe haven in times of market volatility, dipped 0.29% to $1924.25 an ounce.
The dollar was down slightly, with the US dollar index dipping 0.37% to $98.73 ahead of the Fed's meeting.