Monetary Policy Anxiety Seen Weakening European Markets

Markets in Europe are expected to open on a weak note on Thursday ahead of key monetary policy reviews in the next week. Bank of Canada’s unexpected rate hike on Wednesday reignited rate hike fears. Caution also prevails ahead of the CPI data due from the U.S. next week.

Wall Street had closed on a mixed note on Wednesday amidst a rise in bond yields that followed the surprise rate hike by Bank of Canada. The Nasdaq Composite dropped 1.29 percent to close at 13,104.89. The Dow Jones Industrial Average added 0.27 percent to finish trading at 33,665.02.

The negative sentiment from Wall Street impacted sentiment at the European bourses and major markets in the region closed with losses on Wednesday. Germany’s DAX dropped 0.20 percent. The pan-European Stoxx-600 slipped 0.19 percent. France’s CAC 40 declined 0.09 percent. U.K.’s FTSE 100 edged 0.05 percent lower. Switzerland’s SMI finished 1.05 percent lower.

Current indications from the European stock futures indicate a weak sentiment. The DAX Futures (Jun) is currently trading 0.15 percent lower. The CAC 40 Futures (Jun) had finished Wednesday’s trading 0.15 percent lower. The pan-European Stoxx 50 Futures (Jun) traded 0.19 percent lower. The SMI Futures (Jun) dropped 1.32 percent. The FTSE 100 Futures (Jun) is trading 0.15 percent lower.

American stock futures are trading in mildly negative territory. The US 30 (DJIA) is down 0.03 percent whereas the US500 (S&P 500) is trading 0.09 percent lower.

Asian stock markets are trading on a mixed note. China’s Shanghai Composite rallied 0.8 percent whereas Hong Kong’s Hang Seng has gained 0.5 percent. India’s Nifty 50 has added 0.24 percent amidst the pause by Reserve Bank of India. Japan’s Nikkei 225 is however trading 0.6 percent lower. New Zealand’s NZX 50 has shed half a percent. South Korea’s KOSPI has declined 0.42 percent. Australia’s S&P ASX 200 declined 0.28 percent.

The Dollar Index (DXY), a measure of the Dollar’s strength relative to six currencies, slipped to 103.96, down 0.13 percent on an overnight basis, as markets remain divided over whether the Fed would hike rates again or do a pause, in the review next week. The EUR/USD pair has increased 0.11 percent to 1.0711 whereas the GBP/USD pair has gained 0.04 percent to trade at 1.2444.

Amidst the Dollar’s weakness, gold prices firmed up. Gold Futures for August settlement are trading at $1,959.45 per troy ounce, up 0.05 percent on an overnight basis.

Crude prices dropped mildly despite official data from the Energy Information Agency showing a decline in inventories in the U.S. Brent Crude Futures for August settlement decreased 0.17 percent to $76.82 whereas WTI Crude Futures for July settlement decreased 0.12 percent to $72.44.

Third estimate of the first quarter GDP is due from the Euro Area later in the day.

Major earnings updates due on Thursday from the region include Systemair, Soitec, M&G, Clas Ohlson, Signet Jewelers and Wizz Air Holdings.

Source: Read Full Article