European Shares Set For A Firm Start
European stocks are likely to open higher on Thursday amid signs China is stepping up its monetary easing efforts to prop up a slowing economy.
China’s central bank cut the one-year loan prime rate (LPR) from 3.8 percent to 3.7 percent, and the five-year LPR from 4.65 percent to 4.6 percent, in the latest move to boost its stuttering economy.
Asian markets were mostly higher as investors brace for the U.S. Federal Reserve’s next policy decision, due to be handed down on Jan. 26.
U.S. President Joe Biden backed the central bank’s plans to scale back stimulus, saying taming inflation is a critical job for the Federal Reserve.
He also indicated his $2 trillion economic agenda will have to be broken up so that a scaled back version can pass Congress.
On Russia-Ukraine tension, Biden said the U.S. and its European allies are united on making sure Russia would face “severe economic consequences” if Putin attacks. He also suggested a full-scale invasion may not be in the Russian leader’s plans.
On the Covid-19 front, World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus said the theory that Omicron could mark the end of the Covid-19 pandemic is not true and it is nowhere near over.
Gold held near a two-month high as easing U.S. Treasury yields nipped dollar gains and geopolitical tensions surrounding Ukraine boosted bullion’s appeal.
Oil prices slipped in Asian trade after industry data showed U.S. crude and gasoline stocks rose last week.
In economic releases, finalized Eurozone inflation figures for December, German wholesale inflation data and U.S. reports on weekly jobless claims and Philly FED manufacturing will likely be in focus.
U.S. stocks ended in the red for the second straight session on Wednesday after U.S. Treasury yields hit fresh two-year highs amid Fed rate hike expectations.
The Dow and the S&P 500 dropped around 1 percent each, while the tech-heavy Nasdaq Composite shed 1.2 percent to close in correction territory for the first time since last March.
European stocks closed slightly higher on Wednesday as investors grappled with the Covid-19 pandemic and the prospect of higher interest rates.
The pan European Stoxx 600 gained 0.2 percent. The German DAX inched up 0.2 percent, France’s CAC 40 index rose 0.6 percent and the U.K.’s FTSE 100 added 0.4 percent.
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