Investors brace for rate cuts in the U.S. and tax hikes in Britain, setting the stage for a volatile December across global markets.
MARKET INSIDER – European markets are poised to open higher on Wednesday as traders intensify their bets that the U.S. Federal Reserve will cut interest rates in December—a shift that is already reverberating across global equities, bonds and currencies. With Wall Street and Asia rallying overnight, the region’s major indices look set to follow suit, driven by an increasingly confident narrative that the world’s most influential central bank is preparing to ease policy just as political winds in Washington push for a more dovish Fed chair.
Futures from IG indicate a broadly upbeat open: London’s FTSE 100 seen rising 0.25%, Germany’s DAX up 0.7%, France’s CAC 40 higher by 0.67% and Italy’s FTSE MIB advancing 0.64%. Markets now price in nearly an 85% probability of a quarter-point cut at the Fed’s Dec. 9–10 meeting, according to CME’s FedWatch tool, after New York Fed President John Williams signaled that the door remains open to “near-term” easing. The optimism intensified after U.S. Treasury Secretary Scott Bessent suggested there is a “very good chance” President Trump could name a new Fed chair before Christmas.
Attention is now zeroing in on Kevin Hassett, the White House National Economic Council Director identified by Bloomberg as the leading contender for the job. Investors view Hassett as more aligned with Trump’s push for lower rates, raising the odds that U.S. monetary policy could turn decisively more accommodative heading into 2025.
Yet Europe’s own policy landscape could deliver its own shock. In the U.K., Chancellor Rachel Reeves is set to unveil the Autumn Budget, a highly anticipated moment that may include sweeping tax hikes as the government attempts to close a yawning fiscal gap while sticking to strict borrowing rules. Markets are bracing for a statement that could reshape corporate sentiment, consumer spending and the trajectory of the British pound as Reeves presents her plans at 12:30 p.m. London time.
With no major earnings or data releases elsewhere in Europe, the day will be defined by the collision of two forces: the prospect of U.S. monetary easing rekindling global risk appetite, and the U.K. preparing for one of its most consequential fiscal resets in years. Investors across Europe now face a pressing question—will the Fed’s pivot be powerful enough to offset the economic tightening expected from Westminster?
