Stoxx 600, FTSE, Fed, Autumn Budget

LONDON — European stocks were slightly higher on Wednesday amid rising expectations that the U.S. Federal Reserve will cut interest rates in December.

The pan-European Stoxx 600 was around 0.8% higher by 1:58 p.m. in London (8:58 a.m. ET), with most sectors and major regional bourses in positive territory.

Regional indexes are following their counterparts on Wall Street and in the Asia-Pacific region higher amid expectations that the Fed will cut when it next meets on Dec. 9-10.

Markets are pricing in almost an 85% chance of a quarter percentage point cut by the central bank, according to the CME FedWatch tool. New York Fed President John Williams also said on Friday that there was room to lower rates “in the near term.“

Global markets also got a boost after U.S. Treasury Secretary Scott Bessent told CNBC on Tuesday that there was a “very good chance” that Trump could name a new Fed chair before Christmas.

While he said he was interviewing candidates, expectations are shifting toward White House National Economic Council Director Kevin Hassett, after Bloomberg reported he had emerged as a frontrunner for the job. Hassett is viewed as someone more likely to push for lower rates.

In the U.K., all eyes are on the Autumn Budget on Wednesday with Chancellor Rachel Reeves set to unveil her spending and taxation plans for the year ahead. There are widespread expectations that the finance minister will announce a raft of tax hikes as she tries to stick to self-imposed rules on spending and borrowing, and has a fiscal black hole to fill as a result.

The country’s fiscal watchdog the Office for Budget Responsibility unexpectedly released its economic and fiscal forecasts ahead of the Autumn Budget, sending yields on British government debt see-sawing.

The benchmark 10-year gilt moved higher after falling as much 4 basis points following the release, but quicky reversed gains. It was last seen 2 basis point lower. Shorter-term gilts followed a similar pattern.

Follow CNBC’s Autumn Budget live blog throughout the day for all the latest news, comment and announcements. Chancellor Reeves delivered her budget statement around 12:30 p.m. London time.

U.K. banks also experienced sharp swings during the session, initially rising on the back of expectations they would be spared from extra taxes in the Autumn Budget, before selling off following the surprise early release of the budget details. Barclays was last seen 3% higher, Natwest advanced around 2.5%, and Lloyds gained 4.2%.

Reeves confirmed the introduction of a council tax charge on properties valued over £2 million ($6.63 million). British housing and construction names Persimmon fell almost 0.2%, Taylor Wimpey shed 0.1%, and The Berkeley Group fell 1.3%, each paring earlier losses. Barratt Redrow climbed back into the green after an initial dip and was last seen 0.4% higher.

Sterling gained on the dollar, moving 0.2% higher to trade at $1.319.

European investors are also monitoring developments in U.S.-led negotiations on a Ukraine peace deal. On Tuesday, U.S. President Donald Trump said a deal was “very close.” U.S. special envoy Steve Witkoff is set to meet with Russian President Vladimir Putin in Moscow, Trump added, while U.S. Army Secretary Dan Driscoll “will be meeting with the Ukrainians.”

It came after reports emerged that Kyiv had accepted the reworked terms of the peace plan, originally drafted by the U.S.

European defense stocks moved higher on Wednesday, with Germany’s Rheinmetall adding just over 1.3% while MilDef Group advanced around 0.3%, paring earlier gains as high as 3.3%.

Elsewhere, Novo Nordisk shares rose 4.7% after the U.S. Centers for Medicare and Medicaid Services announced the newly negotiated price for its bestseller drugs Ozempic and Wegovy from 2027. The new price for patients on Medicare will be $274, a 71% discount from its current list price.

— CNBC’s Pia Singh contributed to this market report.