European Shares Seen Lower As Investors Fret Over Hawkish Fed
European stocks are seen opening a tad lower on Thursday as the Fed’s hawkish policy outlook offset investor optimism over China’s central bank cutting a key lending rate to support real estate and domestic demand.
Downbeat Chinese data also rekindled concerns about the global economic outlook.
Asian markets traded mixed after China’s central bank cut its one-year medium-term lending facility rate by 10 basis points to 2.65 percent, marking the first rate cut in 10 months.
Expectations are building for additional stimulus after Chinese industrial output and retail sales figures fell short of market forecasts.
Elsewhere strong Australian jobs data lent some support to the Aussie dollar, while the yen hovered near a seven-month low ahead of Friday’s Bank of Japan meeting, with the central bank expected to maintain its ultra-dovish stance and yield curve control settings.
The dollar index recovered some ground and Treasury yields mostly rose amid signs that the Fed may have to keep interest rates higher for longer.
Gold edged lower and oil extended overnight losses as new projections added a hawkish tilt to the Fed’s interest-rate decision.
Traders await a European Central Bank meeting later in the day, with markets expecting an eighth straight rate hike that would take borrowing costs to two-decade highs.
Across the Atlantic, reports on weekly jobless claims, retail sales and industrial production may sway sentiment.
U.S. stocks ended mixed overnight after the Federal Reserve held interest rates steady, as widely expected, but signaled that borrowing costs will likely rise by another half of a percentage point by the end of this year.
The tech-heavy Nasdaq Composite gained 0.4 percent and the S&P 500 finished marginally higher while the Dow shed 0.7 percent from a four-month closing high reached the previous day.
European stocks closed higher on Wednesday on the back of encouraging German, Eurozone and U.K. data.
The pan European STOXX 600 added 0.4 percent. The German DAX and France’s CAC 40 both rose about half a percent while the U.K.’s FTSE 100 inched up 0.1 percent.
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