Investors Await Vital Decision From The Fed.

European stock markets are likely to begin higher on Wednesday, as investors await the outcome of the critical Fed policy meeting, in addition to eurozone unemployment stats and further corporate results.

Markets fell sharply on Tuesday as investors worry about the condition of the U.S. banking sector in the aftermath of First Republic Bank's bankruptcy over the weekend, the worst U.S. bank failure since the 2008 financial crisis, putting pressure on the shares of other smaller banks.

Nevertheless, there seems to be greater confidence in the European banking system, especially following the takeover of struggling lender Credit Suisse by Swiss rival UBS.

So far, the latest quarter's earnings have been mostly positive, with Europe's largest bank, HSBC, for example, trebling profits and restoring its dividend on Tuesday.

BNP Paribas, the eurozone's largest bank, extended its winning streak Wednesday, announcing that earnings more than quadrupled year on year in the first quarter, boosted by the sale of its U.S. retail subsidiary, while sales above expectations.

However, advances are expected to be restricted Wednesday as markets await the Fed’s statement on interest rates and its follow-up press conference later in the session.

The Fed is largely expected to raise interest rates by a quarter point, so investors will be paying close attention to Fed Chair Jerome Powell's remarks to see if cuts are probable this year, as well as his views on the status of the banking system.

The price of crude held steady Wednesday ahead of Fed officials' announcements but stayed near five-week lows despite a larger-than-expected drop in US oil stocks.

Figures from the API, published on Tuesday, indicated that US oil stocks declined for the third consecutive week for the first time since December, falling by 3.9 million barrels last week.

Traders will wait for confirmation from the EIA later in the afternoon, but this overall positive news has had little influence on a market concerned about the impact of another U.S. interest rate rise on economic activity, and hence oil demand.

(investing.com, reuters.com)