European stock markets rose on Wednesday, recovering from a drop the day before.
The FTSE 100 index went up slightly, but the UK market performed especially well, rising 0.8% after a surprise drop in inflation made investors hopeful for an interest rate cut soon.
Banks were the top performers, reaching their highest value levels since 2008. Energy and mining companies also saw gains because the prices of oil and silver increased. Investors are now watching closely for upcoming interest rate decisions from major central banks later this week.
However, not every company did well; shares in the supply business Bunzl fell 7% because the company predicted it would make less profit in 2026.
On the FX front, the US dollar recovered slightly on Wednesday, moving up from its lowest point since early October. This happened after new reports showed that the job market remains weak, leaving investors unsure about when the Federal Reserve will decide to cut interest rates next.
Despite this small rise, the dollar has had a difficult year overall; it has lost about 9.5% of its value, which puts it on track for its biggest yearly drop since 2017.
In other currency markets, the Euro fell slightly but remains near a three-month high as traders wait for the European Central Bank’s meeting on Thursday, where interest rates are expected to stay unchanged.
Meanwhile, the Australian and New Zealand dollars both dipped slightly today, but they are finishing the year strongly. The New Zealand dollar is set to gain over 3% this year, ending a four-year losing streak, while the Australian dollar is on pace for a nearly 7% rise, its best performance since 2020.
Currency Power Balance
