European stocks up, the week of the three central banks

European stock markets closed higher, looking ahead to the central bank meetings scheduled for this week. Frankfurt gained 0.91%, Paris 0.83% and London 0.71%, according to data reported by the ANSA news agency. The movement of the indices comes in a week that sees three central banks of global weight — the Federal Reserve, the European Central Bank and the Bank of Japan — set to rule on monetary policy within a few days of one another.

The Federal Reserve is preparing to leave rates unchanged at its October 28 meeting, without however ruling out a hike in December: an indication that leaves the outlook for the coming months open rather than settled, according to MF Milano Finanza.

On the European front, the European Central Bank’s official calendar sets the monetary policy meeting in Frankfurt for October 28 and 29, with the decision and the press conference by President Christine Lagarde expected on the 29th, according to Capitalist.it, based on the institution’s official calendar. The market expects the ECB to keep the deposit rate at 2.5%, with a high probability of a subsequent hike in December according to interest rate swaps.

The picture emerging from these three independent sources — ANSA, MF Milano Finanza and Capitalist.it, the latter based on the ECB’s official calendar — is one of markets moving ahead of official decisions, guided more by expectations than by announcements already made. The percentage gains of the three main European indices remain, in this context, relatively contained: none of the three markets exceeds a 1% daily change.

The week thus closes with a rare calendar alignment — three central banks of global weight ruling within a few days of each other — and with a market that, according to the interest rate swaps cited by the sources, is already pricing in a possible move on ECB rates by the end of the year, even in the absence of a formal decision to that effect at the October meeting.