^{Photo: The Guardian}

LONDON — Equity markets across Europe looked set to start the day on a positive note, fueled by rising confidence that the U.S. central bank will ease interest rates in early December. According to trading data from IG, Britain’s benchmark index was expected to open up about 0.25 percent, Germany’s major index around 0.7 percent, France nearly 0.67 percent, and Italy about 0.64 percent higher.

Markets in the region appeared eager to follow the direction of Wall Street and Asia-Pacific markets — themselves already climbing on growing expectations that the Fed will act to cut interest rates at its next policy meeting scheduled for December 9–10.

Fed Rate Cut Betting Fuels Market Momentum

The odds of a 25-basis-point reduction by the Fed have surged to almost 85 percent, as measured by the widely followed CME FedWatch Tool. Adding weight to those expectations, a senior Federal Reserve official noted there is scope to lower rates “in the near term.”

Simultaneously, optimism was bolstered by remarks from U.S. Treasury Secretary Scott Bessent, who told major media outlets that there was a “very good chance” the White House could name a new Fed chair before Christmas — a move that could lean dovish on monetary policy. Among the possible candidates now reportedly being considered is Kevin Hassett, a figure viewed by many as sympathetic to lower borrowing costs.

With these developments, investors appear increasingly comfortable embracing risk — a key driver behind the projected lift in European equity indexes this morning.

UK Holds Its Breath as Autumn Budget Looms

At the same time that global bond and equity markets shift, London’s financial community is keeping a close eye on the 2025 Autumn Budget 2025. The budget — due to be unveiled today by the UK’s finance chief — comes at a fraught moment. Public finances are under pressure and the government needs to reconcile its spending pledges with fiscal constraints.

Analysts estimate the “fiscal black hole” the government faces could be in the region of £20 to £40 billion. With borrowing costs still high and national debt mounting, there is broad speculation that tax hikes may be introduced to bridge the gap. Others expect the government may seek savings elsewhere, or restructure public-spending programs.

The weight of these fiscal choices falls squarely on the shoulders of the Chancellor, forcing a delicate balancing act between stimulating growth, meeting social commitments, and restoring fiscal stability.

What It All Means for Investors

The confluence of a likely U.S. rate cut and a pivotal UK Budget announcement makes for a potentially volatile but opportunity-rich landscape for investors in European equities.

If the Fed delivers a rate cut, it could lift global risk assets, ease pressure on borrowing costs and support economic growth — all factors that tend to favor equities.

At the same time, depending on the specifics of the UK Budget, markets may react sharply — especially if there are unexpected tax changes or major spending adjustments. Investors are likely to focus on sectors most sensitive to interest rates (e.g., banking, real estate) as well as those exposed to fiscal policy shifts (e.g., consumer goods, infrastructure, energy).

The stage is set for one of the more eventful trading sessions in recent weeks as markets absorb two powerful catalysts: U.S. monetary-policy expectations and significant UK fiscal decisions.