Europe midday: US rate cut hopes boost sentiment

(Sharecast News) - European shares were higher on Wednesday as investors increased bets on a US rate cut next month and eyed the UK government's Budget, widely expected to raise billions in taxes to plug a large gap in public finances.

The pan-regional Stoxx 600 was up 0.56% to 571 at 1154 GMT with all major bourses higher. Germany's DAX rose 0.38%, Britain's FTSE 0.36% and France's CAC 0.52%

"Wall Street is heading into the holiday season with more than turkey on the table. US equities notched another positive close last night and look poised to open higher again this afternoon, setting the stage for a festive mood before tomorrow's Thanksgiving break," said Hargreaves Lansdown analyst Matt Britzman.

"The real feast, however, has been in rate expectations. The interest-rate yo-yo is back in full swing, with markets now pricing in close to an 80% chance of a December cut."

"For all the finger pointing towards AI, it's hard to ignore that the dramatic shifts in rate cut hopes have been the dominant market driver in recent weeks. Still, whichever force you believe is steering the ship, brace for turbulence: the Fed's internal debate remains far from settled, and mixed signals rarely make for smooth sailing."

"All eyes turn to (Finance Minister) Rachel Reeves this afternoon, as she unveils a Budget expected to deliver tens of billions in new taxes - a move that could ripple through markets and consumer confidence alike."

Sentiment was boosted by indications of progress in talks to end the war in Ukraine. Defence stocks were still on the rise as Russia continued to attack civilian targets in its neighbouring country.

In equity news, Adecco slumped as the recruiter maintained margin targets but investors feared the threat from artificial intelligence could see a dividend cut in order to maintain leverage.

Reporting by Frank Prenesti for Sharecast.com