European equities seen after the Fed meeting
(RTTNews) – European stocks are expected to open higher on Thursday after the Federal Reserve signaled a faster cut in bonds and said it expects up to three interest rate hikes in 2022 to combat rising inflation. But the good news is that the Fed expects inflation to slow.
Asian markets traded in a mixed fashion, with US-China tensions the center of attention after the US House of Representatives passed a resolution banning imports from China’s Xinjiang region due to the concerns about the use of forced labor and other abuses.
In addition, the media suggests that the United States may impose new sanctions on China’s largest chipmaker SMIC.
On the Covid-19 front, European Commission President Ursula von der Leyen has said Omicron is expected to be the dominant variant of the coronavirus in European Union countries by mid-January.
Globally, more than 75 countries have reported confirmed cases of omicron. In the United States, 36 states have detected the variant. Apple has delayed the date its employees will resume their duties.
Bond yields rose and gold edged up on the weaker dollar, while oil prices rose about 1% after the EIA’s weekly oil inventories report showed that demand for petroleum products had reached an all-time high.
It’s a particularly busy day on the eurozone economic calendar, with December’s preliminary private sector PMIs for France, Germany and the eurozone likely to be the focus of concern.
The European Central Bank, the Bank of England, as well as the Swiss National Bank and Norges Bank will hold policy meetings later today and eventually lead to a tightening of policy to counter widening inflationary risks.
Across the Atlantic, traders are likely to keep an eye on reports on weekly jobless claims, housing starts and industrial production.
U.S. stocks rallied overnight after the Fed announced its widely anticipated move to cut bond purchases by $ 30 billion per month.
While the latest central bank projections predict up to three rate hikes in 2022, Fed Chairman Jerome Powell has stressed that the Fed’s policies are flexible and adaptable to any change in its economic outlook.
In particular, he warned that any resurgence of Covid-19 could slow the need for a rate hike.
The Nasdaq Composite climbed 2.2%, the Dow Jones 1.1% and the S&P 500 1.6%.
European markets ended largely higher on Wednesday, helped by gains in tech and healthcare stocks.
The pan-European Stoxx 600 gained 0.3%. The German DAX edged up 0.2% and the French CAC 40 index rose half a%, while the UK FTSE 100 fell 0.7% after data showed prices at consumption reached their highest level in a decade.
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