European stocks recover from geopolitical shock ahead of big Fed move – Reuters

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, September 20, 2022. REUTERS/Staff

Sep 21 (Reuters) – European stocks ended higher on Wednesday ahead of the U.S. Federal Reserve’s likely third consecutive interest rate hike later in the day, while ignoring Russia’s announcement of military mobilization partial.

The continental STOXX 600 index (.STOXX) ended up 0.9%, rebounding from hitting its lowest level since early July earlier in the day after Russian President Vladimir Putin also accused the West of “nuclear blackmail” on the war in Ukraine. Read more

The focus has gradually shifted to US central bank policy, as the Fed is expected to raise its key rate by 75 basis points (bps) later today, continuing its aggressive fight against still high inflation.

“Vladimir Putin’s decision to opt for a partial mobilization while waving his nuclear arsenal is a serious development, but right now the markets are too focused on what they hope the Fed might say,” Chris said. Beauchamp, chief market analyst at online trading platform IG.

A few traders expect the US central bank to raise rates by one percentage point. FEDWATCH

“The 75 basis point hike is priced in at this point, but where it gets interesting, what will the terminal rate be?” said Giles Coghlan, chief market analyst, HYCM.

“The market wants to see if the Fed is going to say that we’re actually in a little bit more trouble than we thought, so we’re going to have to be more aggressive than expected.”

Gains in defense stocks also provided support, with Rheinmetall (RHMG.DE), Leonardo (LDOF.MI), Thales (TCFP.PA) and BAE Systems up between 4.0% and 9.3%.

However, Russia’s military mobilization has amplified concerns over the conflict which has raised the possibility of power rationing and potential blackouts over the winter after Russia abruptly shut off the taps on a main gas pipeline. towards Europe.

Germany has confirmed the nationalization of Uniper (UN01.DE), the country’s largest importer of Russian gas, as it strives to secure non-Russian energy sources. Shares in the gas importer fell 25.3%. Read more

Shares of Fortum (FORTUM.HE) jumped 9.5% after Germany agreed to nationalize Uniper by buying out the Finnish company’s stake. Read more

Energy stocks (.SXEP) rose 1.6% as oil prices climbed on news of the mobilization.

Reporting by Shreyashi Sanyal and Johann M. Cherian in Bengaluru; Editing by Sriraj Kalluvila and Alex Richardson

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