European markets climb as investors brace for latest Fed decision; Stoxx 600 up 1.5%

LONDON — European stocks advanced on Wednesday as investors braced themselves for the latest monetary policy announcement from the U.S. Federal Reserve.

The pan-European Stoxx 600 added 1.5% in early trade, with travel and leisure stocks jumping 4.1% to lead gains as all sectors and major bourses entered positive territory.

In terms of individual share price movement, Britain’s Allfunds Group climbed 6.6% after Citigroup upgraded the company’s stock to “buy” from “neutral.”

At the bottom of the European blue chip index, Swedish hygiene products group Essity fell 4.6% after reporting a larger-than-expected fall in fourth-quarter profit as distribution costs squeezed margins.

The positive trade for Europe comes after markets in the region closed higher on Tuesday, recouping some losses from Monday’s sharp sell-off as investors sifted through a fresh batch of corporate earnings.

On Wednesday, however, global investors are focused on the latest policy update from the Fed when its two-day meeting ends.

Essentially, market participants are eager to know when the central bank will raise interest rates and by how much. The Fed is expected to signal a rate hike as soon as March and more policy tightening on the table to address high inflation. An interest rate decision is slated for Wednesday at 2 p.m. ET.

Asia markets traded mixed on Wednesday as investors awaited the Fed statement while U.S. stock futures rose slightly Tuesday night, following another wild session for the market.

Geopolitical tension at the Russia-Ukraine border continued to dominate market concerns too. President Joe Biden spoke with European leaders Monday amid fears of a possible Russian invasion of Ukraine and on Tuesday, he said that he would consider imposing personal sanctions on Russian President Vladimir Putin if Russia attacked its neighbor.