European equity markets were poised for a subdued open on Wednesday, amid concerns that US President-elect Donald Trump could target European countries with tariffs following his recent threats against China, Mexico, and Canada. Investors were also cautious ahead of a key US inflation report that could influence the Federal Reserve’s plans for rate cuts. Meanwhile, market participants will be focused on the latest consumer confidence data from Germany and France, as well as EasyJet’s earnings report. In premarket trading, Euro Stoxx 50 futures dropped 0.15%, while Stoxx 600 futures were largely flat.

Federal Reserve officials conveyed optimism that inflation is subsiding and the labor market remains robust, supporting the possibility of further interest rate cuts, though at a measured pace, minutes from November 6-7 meeting showed. Officials noted that monetary policy decisions are contingent on economic trends and cautioned against making premature rate cuts. The volatility in recent data and uncertainty about the neutral interest rate's impact on economic activity made policymaking particularly challenging. Some participants suggested keeping rates at restrictive levels if inflation persisted, while others advocated for accelerated cuts if labor markets weakened. The meeting avoided addressing the economic implications of Donald Trump’s recent presidential election victory but acknowledged the need for flexibility.

WTI crude oil futures held below $69 per barrel on Wednesday as traders weighed signs of another OPEC+ output delay and easing geopolitical risks following the Israel-Hezbollah cease-fire. Markets are closely awaiting the OPEC+ meeting on December 1, with reports suggesting the group will delay January’s planned production increase by several months due to signs of a supply glut. Meanwhile, Middle East tensions eased after Israel and Hezbollah reached a 60-day cease-fire deal through US-mediated talks. However, both sides resumed attacks shortly after President Biden's announcement, underscoring the challenges of securing a lasting agreement. On the demand side, API data revealed a 5.9 million barrel drop in US crude oil inventories last week, the largest decline since August, defying expectations of a 0.25 million barrel increase.

Profits earned by China's industrial firms declined by 4.3% yoy to CNY 5,868.04 billion in the first ten months of 2024, steeper than a 3.5% fall in the prior period. This reflected an economic downturn driven by persistently shaky demand, deflation risks, and property weakness. Profits in state-owned companies dropped further (-8.2% vs -6.5% in January-Sept), while those in the private sector fell much slower (-1.3% vs -9.6%). Among industries, profits shrank for non-metallic minerals (-49.6%), coal mining (-23.7%), chemicals (-7.7%), special equipment (-5.2%), electrical machinery (-5.1%), cars (-3.2%), and oil and natural gas (-1.8%). Meanwhile, petroleum and other fuels, and ferrous metal smelting turned from profits to losses. On the other hand, profits rose for non-ferrous metal smelting (40.0%), heat production (13.8%), textile (5.3%), computer, communications (8.4%), and agriculture, food (2.8%). Monthly, industrial profits shrank by 10.0% yoy, after a 27.1% slump in September.

The Reserve Bank of New Zealand lowered its official cash rate (OCR) by 50 basis points to 4.25% during its November 2024 policy meeting, marking the third consecutive rate cut this year and aligning with market expectations. The annual inflation rate in New Zealand slowed to 2.2% in Q3 2024, the lowest reading since March 2021, down from 3.3% in the previous quarter. Meanwhile, economic activity in New Zealand remains subdued, with output still below potential and employment growth expected to remain weak through mid-2025. With inflation now close to the midpoint of the policymakers' 1% to 3% target band, combined with weak GDP and labor market figures, the committee is increasingly confident about further easing monetary policy restraints.

The Nikkei 225 Index dropped 0.8% to close at 38,135, while the broader Topix Index lost 0.9% to 2,665 on Wednesday, extending losses from the previous session as the yen continued to strengthen amid speculation that the Bank of Japan may raise interest rates again next month. A stronger yen dampens the profit outlook for Japan’s export-driven industries and makes Japanese assets more expensive for foreign investors. Traders are also awaiting the latest Tokyo inflation data, which is seen as a leading indicator for nationwide price trends. Export-heavy auto and consumer stocks led the decline, with notable losses from Toyota Motor (-3.6%), Honda Motor (-3%), Nissan Motor (-4.7%), and Fast Retailing (-0.5%). Major technology stocks also came under pressure, including Advantest (-3.7%) and Tokyo Electron (-1.8%).