European stock markets are anticipated to open higher on Tuesday after China lowered the cost of its short-term borrowing.

Prior to important inflation data on both sides of the Atlantic and the commencement of the Fed’s most recent policy-setting meeting, European stock markets are anticipated to open higher on Tuesday after China lowered the cost of its short-term borrowing.

Early on Tuesday, China's central bank lowered its short-term lending rate in an effort to aid the world's second-largest economy's sluggish post-COVID recovery. China is a crucial regional development engine and a significant export market for many of the biggest corporations in Europe.

In response to continuing dismal economic indicators, the first decrease in the seven-day reverse repo rate in ten months suggests that more, more significant intervention is on the horizon.

Fed’s two-day policy-setting meeting is about to begin, and investors are anticipating a barrage of economic data, including the Spanish consumer price index and the German ZEW economic confidence index. This news has given European markets a boost.

In the UK, the rate of unemployment in the United Kingdom increased to 3.8% in April from a revised 3.9% the previous month, average wages before bonuses increased to 7.2% from 6.8%, suggesting that the Bank of England will continue to face pressure to raise interest rates.

German consumer prices decreased by 0.1% month over month in May, with an annual increase of 6.1%, down from the 7.2% increase witnessed in April.

The Fed is anticipated to stop its year-long cycle of tightening as policymakers evaluate the effects of raising interest rates to a 16-year high, but the publication of the most recent data on consumer inflation in the United States might change expectations.

It is anticipated that the May CPI report would show annual growth of 4.1% and monthly growth of 0.2%, down from 4.9% and 0.4%, respectively, in April. It is anticipated that core prices, which exclude volatile food and energy, will increase 5.3% annually and 0.4% monthly.

Tuesday saw a little increase in oil prices as continuing worries about the demand outlook in China and the U.S. led to some of the devastating losses from the previous session being recovered.

In the wake of Monday's nearly 3.5% decline, both benchmarks have now adjusted their positions out of prudence in anticipation of imminent U.S. inflation data and the completion of the Fed's meeting.

(Sources: investing.com, reuters.com)