Markets in Europe are seen opening on a cautious note on Thursday, ahead of key central bank reviews and major economic data releases. Interest rate decisions by Bank of England, European Central Bank and Swiss National Bank are due on Thursday.
Sentiment would also be shaped by Wednesday’s FOMC outcome. Though the Fed acted on expected lines to hike interest rates by 50 basis points, the accompanying guidance and commentary was more hawkish than feared, with peak rates raised to 5.1 percent, from 4.6 percent earlier.
The hawkish Fed commentary dragged the Wall Street lower on Wednesday, with the Nasdaq Composite shedding 0.76 percent to close at 11,170.89 and the Dow Jones Industrial Average dropping 0.42 percent to finish trading at 33,966.35.
The negative sentiment reverberated in the European markets too and by close of trading on Wednesday, Germany’s DAX lost 0.26 percent, France’s CAC 40 dropped 0.21 percent, U.K.’s FTSE 100 declined 0.09 percent and the pan-European Stoxx-600 edged 0.02 percent lower. Switzerland’s SMI however advanced 0.22 percent.
Current indications from the European stock futures also portend a weak opening on Thursday. The FTSE 100 Futures (Mar) is currently trading 0.13 percent lower. The DAX Futures (Dec) is currently trading 0.36 percent lower. The CAC 40 Futures (Jan) had closed 0.87 percent lower on Wednesday.
American stock futures however indicate a minor rebound. The US 30 (DJIA) index and the US500 (S&P 500) are both up 0.1 percent.
Asian stock markets are trading mostly in the red zone amidst anxiety following the Fed’s hawkish rate warning. South Korea’s KOSPI is trading 1.24 percent lower. Hong Kong’s Hang Seng has dropped 1.14 percent. Australia’s S&P ASX 200 has declined 0.64 percent. India’s Nifty 50 and Japan’s Nikkei 225 have both lost 0.44 percent. China’s Shanghai Composite is trading 0.3 percent lower. New Zealand’s NZX 50 has however gained 0.28 percent.
The hawkish rate warnings by the Fed, lifted the Dollar and the Dollar Index (DXY), a measure of the Dollar’s strength relative to six currencies. DXY is currently at 103.90, gaining 0.13 percent. The EUR/USD pair decreased 0.22 percent to 1.0658 whereas the GBP/USD pair dropped 0.23 percent to 1.2393.
Amidst the Fed’s indication of a higher peak for interest rates and the Dollar’s mild rally, Gold Futures for February settlement plunged 0.86 percent to trade at $1,803.00 per troy ounce.
The hawkish Fed guidance stoked fears of an economic recession, dragging down both the crude oil benchmarks. WTI Crude Futures for January settlement has decreased 0.85 percent to $76.62, whereas Brent Crude Futures for February settlement has fallen 0.69 percent to $82.13.
In addition to the key interest rate decisions, other economic data releases due on Thursday are Wholesale prices (November) from Germany, Business Confidence (December) from France and Inflation Rate Final (November) from France.
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