European Shares Seen Higher As Fed Prepares To Cut Rates

European stocks are seen opening higher on Tuesday as a two-day policy meeting of the U.S. Federal Reserve gets underway later today.

The Fed is widely expected to lower interest rates, but there remains some debate about the size of the rate cut.

CME Group’s FedWatch Tool currently indicates a 65.0 percent chance of a half point rate cut and a 35.0 percent chance of a quarter point rate cut.

The U.S. retail sales data for August due later in the day may weigh on the Fed’s interest-rate decision.

Regardless of the size of the cut, the U.S. central bank is still expected to continue lowering rates over the remainder of the year.

Asian markets traded mixed, with Hong Kong’s Hang Seng index surging 1.4 percent on China stimulus hopes.

Japan’s Nikkei was down nearly 2 percent as the yen held ground for the sixth successive day against the U.S. dollar. Markets in mainland China and South Korea remain closed for public holidays.

The dollar and U.S. Treasury yields were coming under selling pressure and gold dipped from recent record highs, while oil extended overnight gains due to concerns surrounding Hurricane Francine’s impact on U.S. Gulf of Mexico output.

U.S. stocks ended mixed overnight as tech stocks dragged and the dollar fell ahead of a slew of central bank meetings due later in the week.

In economic news, a survey showed manufacturing activity expanded in the New York region for the first time in almost a year.

The Dow rose 0.6 percent to a record high close and the S&P 500 inched up 0.1 percent while the tech-heavy Nasdaq Composite dropped half a percent.

European stocks ended mostly lower on Monday to snap a three-day winning streak amid signs that an economic slowdown in China is deepening.

The pan European STOXX 600 slipped 0.2 percent. The German DAX shed 0.4 percent and France’s CAC 40 eased 0.2 percent while the U.K.’s FTSE 100 ended flat with a positive bias.