European equity markets opened flat on Wednesday, with investors adopting a cautious stance as they awaited critical US inflation data and monitored developments in global trade diplomacy.
However, sentiment could remain mixed as growth forecasts diverge.
Deutsche Bank’s upward revision to its global growth forecast could support the market. The bank now expects world GDP to expand by 2.9% in 2025, citing easing trade tensions and supportive fiscal policies.
The euro area forecast was lifted to 0.8%, with Germany expected to see a modest 0.3% expansion this year, accelerating in 2026. Deutsche Bank also noted that European Central Bank rate cuts, combined with rising defense spending, are beginning to unlock credit and investment flows across the bloc.
On the other hand, the World Bank revised its forecasts down, with global growth to expand by 2.3% in 2025, down from 2.7%. The euro area GDP is now expected to grow by 0.3 percentage points less at 0.7%.
However, the broader market direction remains subdued as investors await the US CPI report later today. A stronger-than-expected print could temper hopes of near-term Fed rate cuts, potentially triggering a reassessment of global risk appetite.
Meanwhile, global trade developments offered a cautiously positive backdrop. The US and China agreed on a framework to implement the Geneva consensus. While these steps fall short of a comprehensive deal, they help ease fears of renewed escalation.
