Kristina
European markets are poised for a mixed opening on Thursday as investors digest a series of central bank actions. According to IG data, Germany’s DAX and France’s CAC 40 are expected to open slightly below the flatline, while the U.K.’s FTSE 100 is set to edge higher. The spotlight today is on the Bank of England, which will announce its latest monetary policy decision at midday London time. Market pricing slightly favors a 25 basis point interest rate cut from the U.K. central bank, signaling the start of a monetary easing cycle. However, analysts point out an unusual level of uncertainty surrounding this decision, despite inflation holding steady at 2%. Some voting members remain concerned about service sector inflation and wage growth.
The Bank of England’s meeting follows the U.S. Federal Reserve’s recent decision to hold rates steady, a widely anticipated move. During his press conference, Fed Chair Jerome Powell indicated that a rate cut in September is “on the table,” provided that inflation data continues to support such a move. Powell, however, seemed to rule out the possibility of a larger 50 basis point cut.
Investors are also reacting to the Bank of Japan‘s unexpected move on Wednesday to raise its benchmark interest rate to around 0.25%, the highest level since 2008. This decision has driven the yen to a four-and-a-half month high against the U.S. dollar and caused a tumble in Japanese stocks. The Bank of Japan hinted at further tightening, adding to the market’s uncertainty.
As central banks dominate the macroeconomic landscape, earnings season continues at full throttle. In U.S. trading on Wednesday, the tech-heavy Nasdaq Composite surged 2.64% after Advanced Micro Devices reported a strong quarter. Facebook parent Meta also rallied in extended trading, buoyed by better-than-expected results. European technology stocks mirrored this performance, posting significant gains. Chip firm ASML saw a notable jump following a Reuters report suggesting it might be exempt from U.S.-led Chinese export restrictions.
Among the major firms reporting on Thursday are oil giant Shell and British bank Barclays. Investors will be keenly watching these earnings reports for further indications of economic health and corporate performance amid a backdrop of central bank maneuvers and macroeconomic shifts.
