European bourses are expected to open on a restrained note on Thursday in the backdrop of the Fed’s first rate hike since 2018. While global markets have reacted positively after the hike, caution ahead of the Bank of England’s monetary policy review later in the day as well as developments from eastern Europe are expected to soften any wild display of relief over the expected quarter percentage rate hike. The seemingly aggressive tone in the Fed’s interest rate forward guidance too is expected to influence investor sentiment in the region’s major bourses.
On Wednesday, European markets had rallied post the Fed’s rate hike announcement. Germany’s DAX gained 3.76 percent, France’s CAC 40 moved up 3.68 percent, the pan European Stoxx 600 gained 3.06 percent, Switzerland’s SMI strengthened 1.87 percent and U.K.’s FTSE 100 added 1.62 percent.
The Wall Street had rallied on Wednesday as the Fed’s announcement of a quarter percentage interest rate hike was more or less on expected lines. The Nasdaq-100 strengthened 3.70 percent to close at 13956.79 and the Dow Jones Industrial Average had moved up 1.55 percent to end at 34,063.10.
The FTSE 100 futures (June) is trading 0.71 percent lower. The DAX Futures (March) is trading 0.32 percent lower. The CAC Futures (April) is 3.95 percent higher.
Dollar Index, which measures the strength of the Dollar against a basket of six currencies has fallen to 98.43, from 98.62 at the close on Wednesday. The EURUSD pair has decreased 0.06 percent to 1.1025, while the GBPUSD pair has increased by 0.07 percent to 1.3154.
Gold futures for April settlement is trading at $1933.40 per troy ounce, about 1.27 percent higher than the previous close of $1,909.20.
WTI Crude for April settlement is trading at $96.67, up 1.72 percent from the previous close whereas Brent Crude for May settlement is trading at $99.77, up 1.79 percent from the previous close amidst the International Energy Agency’s warnings on crude oil supply.
American futures point to negative trends, with the US 30 (DJIA) index down 0.13 percent and US500 (S&P 500) down 0.13 percent. The Fed raising its inflation projections as well as signalling six more hikes in the year is seen as an aggressive posture in the fight against inflation.
Asian markets are mostly in positive territory, following Wall Street’s relief rally overnight. Hong Kong’s Hang Seng is the best performer with a rally of 4.99 percent. India’s Nifty 50 has rallied 1.80 percent; China’s Shanghai Composite has surged 1.58 percent; South Korean Kospi has gained 1.40 percent; Australia’s S&P ASX 200 has moved up 1.05 percent and New Zealand’s NZX 50 has gained 1.05 percent.
Switzerland awaits February’s Balance of Trade data. The forecast is at 2.9 billion CHF as compared to a trade surplus of 2.2 billion CHF in the previous month. The final reading of the annual inflation rate in the Euro Area for February is seen at 5.8 percent versus 5.1 percent in January.
ECB President Lagarde’s speech would also be keenly watched for further cues on monetary policy stance.
Earnings updates are due from France’s Veolia Environnement, Germany’s RTL Group and 1&1 Drillisch AG, as well as from the Ocado Group, Harbour Energy, Playtech, Sanne Group and Marshalls from the U.K.
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