The pound fell 0.3% after data showed Britain's economy shrank in October by 0.3%, which raised hopes of rate cuts by the Bank of England. Economists expected the GDP to remain unchanged.

Oil prices declined yesterday due to signs of crude oversupply. Bond yields also declined following the US CPI inflation data, which came roughly in line with expectations.

Later today, the Fed will announce its decision on monetary policy, and it is widely expected to keep rates unchanged.

Among stocks, Impellam Group's stock experienced a 2% drop after announcing an agreement on a GBP 483 million takeover bid from HeadFirst Global. Shareholders are set to receive both cash and loan notes per share, along with an interim dividend. The acquisition is recommended by Impellam directors and is expected to be completed in the first half of 2024 if approved.

Entain PLC's stock fell nearly 1% following the announcement that CEO Jette Nygaard-Andersen has stepped down with immediate effect. Nonexecutive director Stella David has been named interim CEO. The change in leadership comes shortly after Entain agreed to a significant settlement in a deferred prosecution agreement.

BAE Systems PLC won a contract with a ceiling value of $8.8 billion from the US Army to continue operating the Holston Army Ammunition Plant in Tennessee. The contract extends for a base period of 10 years. The stock closed more than 1% higher on Tuesday.

Things to read today:

Stocks outperform bonds by less than you think (Financial Times)

Jay Powell’s Mixed Price Signals (WSJ)