European Shares Set For Cautious Start
European stocks are seen opening a tad higher on Thursday, even as a cautious undertone may prevail on fears of central bank policy tightening.
Bank of Korea Governor Lee Ju-yeol said the bank is preparing for an “orderly exit” from its record-low interest rate at some point in the face of accelerating inflation and a build-up of dangerous imbalances.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) surprised many by projecting that it might hike interest rates as early as September next year.
Federal Reserve Vice Chairman for Supervision Randal Quarles said Wednesday that he was prepared to open talks on reducing the emergency support measures if the economy continues to power out of the health crisis.
The U.S. dollar held a climb and Treasury yields were stable amid signs the Federal Reserve is slowly but surely edging towards a discussion about tightening monetary policy.
Asian markets fell broadly, though Chinese stocks saw modest gains after data showed profits at industrial firms grew 57 percent year-on-year in April.
Gold hovered near a 4-1/2-month high while oil prices eased on concerns about a potential supply increase from Iran.
It’s a relatively quiet day ahead on the European economic calendar, with investors awaiting German consumer sentiment figures and ECB policymakers’ speeches for directional cues.
Across the Atlantic, sentiment may be swayed by the second release of the first quarter U.S. gross domestic product data as well as reports on weekly jobless claims, durable goods orders and pending home sales ahead of the closely-watched reading on inflation, due Friday.
U.S. stocks rose overnight after comments from central bank officials suggested that the Fed and the ECB won’t rush to tighten policy despite recent signs of a surge in inflation. Upbeat earnings news from retailers added to the positive sentiment.
The Dow finished marginally higher, the S&P 500 inched up 0.2 percent and the tech-heavy Nasdaq Composite gained 0.6 percent.
European stocks ended narrowly mixed on Wednesday, with renewed optimism about business reopening and global economic recovery helping underpin sentiment.
The pan European Stoxx 600 ended flat with a positive bias. The German DAX slipped 0.1 percent and the U.K.’s FTSE 100 ended flat with a negative bias, while France’s CAC 40 index ended marginally higher.
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