(Bloomberg) -- UK stocks dipped, following a global selloff in the previous session, as all eyes turned to the Federal Reserve’s policy decision later on Wednesday. Trading was thin with most European indexes closed for a holiday.

The FTSE 100 slipped 0.3% by the close, tracking declines on Wall Street after data showed US factory activity contracted while input prices rose at the fastest pace since 2022. 

The UK’s domestically focused FTSE 250 fell 0.3%. The OMX Copenhagen 25 Index slipped 0.6%, weighed down by a dip in Danish drugmaker Novo Nordisk A/S on the day before it’s scheduled to report earnings.

GSK Plc shares rose after it increased its profit forecast for the year as it predicts higher-than-expected sales from HIV, infectious diseases and oncology drugs. Aston Martin Lagonda Global Holdings Plc dropped as the sales of its luxury cars dived in the first quarter.

European stocks snapped a five-month winning streak in April, on worries that the Fed would hold interest rates higher for longer amid sticky inflation. Yet, the declines masked a heavy rotation below the surface, with UK and value stocks offering the best returns. 

Typical value sectors such as energy, mining and banks have strongly outperformed the Stoxx 600, along with some defensives like staples, utilities and health care — stocks that are found in abundance in the UK benchmark.

“We see more upside for UK stocks,” Mike Coop, EMEA chief investment officer at Morningstar Investment Management, said in an interview at the Morningstar Investment Conference in London. “Things are a little bit overdone in the US. Europe’s had a pretty good run, and in general there’s not as a whole lot of value there, and we’ve been taking profits.”

Focus Wednesday was on the Fed’s policy decision, and officials are expected to signal no plans for rate cuts in the near future. The rate decision, and possibly an announcement on the pace of its balance-sheet reduction program, will be released at 2 p.m. in Washington. Chair Jerome Powell will hold a press conference 30 minutes later.

“We’ve gathered sufficient macro data to anticipate a more hawkish stance from the Fed this week, so that shouldn’t come as a surprise and markets are ready for that,” said Susana Cruz, a strategist at Liberum Capital.

For more on equity markets:

  • Rotation Is Full-On and the UK Is Leading the Way: Taking Stock
  • M&A Watch Europe: SES, Applus, Anglo American, Puig, Spinneys
  • Total Talks Up NY With Sector Abuzz About Switches: ECM Watch
  • US Stock Futures Fall; Leggett & Platt, Starbucks Fall
  • Gone With the Quinn: The London Rush

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--With assistance from Michael Msika and Joe Easton.

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