European stock markets are set to open higher on Wednesday as consumer morale improved in Germany, the region's largest economy.

Following Tuesday's decline, European stock markets are anticipated to open higher on Wednesday as consumer morale improved in Germany, the region's largest economy. 

According to the forward-looking index published by the GfK institute earlier on Wednesday, consumer sentiment in Germany is set to slightly improve in January. 

The index registered at -37.8, indicating a modest but steady improvement from the revised -40.1 recorded in the previous month and the -42.8 recorded in October, the lowest level in more than ten years, as government energy policies helped to stabilise morale.

This comes as data earlier this week indicated that German company morale increased more than anticipated in December. The Ifo institute also said that despite the oil crisis and high prices, the outlook for Europe's largest economy improved. 

Due to optimism that the anticipated economic slowdown at the start of 2023 may not be as severe as expected, this is assisting European equity markets in their quest to close the year on a more upbeat note. 

The decision by the Bank of Japan to increase the cap on the yields on 10-year Japanese government bonds caught investors off guard, potentially indicating the end of the last period of ultra-accommodative monetary policy in the developed world. European stocks ended Tuesday with a largely negative performance.

The European Central Bank has already aggressively tightened monetary policy in an effort to reduce inflation, which is near 40-year highs, alongside institutions like the U.S. Federal Reserve and the Bank of England. 

As his nation continues to be victimised by Russian aggression, Ukrainian President Volodymyr Zelenskiy is set to come to Washington to meet with President Joe Biden and visit Congress later on Wednesday. 

In other new, early Wednesday saw a slight increase in oil prices, supported by a larger-than-expected decline in U.S. crude inventories amid supply problems brought on by the Keystone pipeline's temporary closure.

In the week ending December 16th, U.S. oil stocks decreased by just over 3 million barrels, according to information from the trade group American Petroleum Institute. 

The official inventory statistics will be made public by the Energy Information Administration later in the session.

Despite recent gains, oil prices have continued to suffer from recent severe declines as worries about a likely recession in 2023 were fuelled by rising interest rates and soaring inflation.

(Sources: investing.com, reuters.com)