European stocks may face indecisiveness on Thursday as the U.S. honors the passing of former President Jimmy Carter, likely resulting in reduced trading volumes. Market sentiment is expected to remain cautious, given the uncertainties surrounding U.S. President-elect Donald Trump's forthcoming economic policies, rising inflation threats, and concerns over the weakening Chinese economy.
Earlier in the week, Trump announced plans to implement substantial tariffs on goods imported from Mexico and Canada, cumulatively valued at hundreds of billions of dollars. On Wednesday, CNN reported that Trump is contemplating declaring a national economic emergency as a legal justification for imposing widespread tariffs on both allies and adversaries.
Minutes from the Federal Reserve's December 17-18 meeting reveal officials' concerns regarding inflation, prompting them to advocate for a deceleration in rate cuts. Concurrently, China grapples with escalating deflation risks amid global trade pressures. Data indicates that China's consumer inflation rate reached a nine-month low in December, alongside continued factory deflation for a 27th consecutive month, challenging Beijing's growth strategy.
Investors are now anxiously awaiting Friday's pivotal U.S. jobs report, following the release of mixed labor market data, to gain further insight into the Federal Reserve's policy trajectory. Domestically, the focus will shift to reports on German industrial output, foreign trade, and Eurozone retail sales.
In Asia, markets were predominantly down, with Japan's Nikkei declining over 1 percent as the yen strengthened on robust wage growth data. Oil prices maintained losses after dropping more than 1 percent on Wednesday, gold prices slipped, while the dollar and U.S. Treasuries remained steady amid uncertain inflation and interest-rate forecasts.
Fed Governor Christopher Waller expressed optimism on Wednesday, suggesting that inflation would gradually move towards the central bank's 2 percent target mid-term, deeming further rate cuts appropriate.
U.S. stocks concluded Wednesday's session with a mixed performance post the release of inconclusive jobs data. The ADP report revealed December's private sector employment growth fell short of economists' expectations. Conversely, jobless claims for the prior week unexpectedly decreased to their lowest in nearly eleven months.
The Federal Reserve's December meeting minutes highlighted officials' anticipation of slower rate cuts in 2025, with ongoing concerns about the inflationary repercussions of Trump's policies. The Nasdaq Composite ended slightly down, while the Dow rose by 0.3 percent and the S&P 500 increased by 0.2 percent.
European stocks broadly declined on Wednesday, weighed down by lackluster Eurozone economic sentiment, German retail sales, and factory orders data. The pan-European STOXX 600 dipped 0.2 percent. Germany's DAX saw a slight decline, France's CAC 40 decreased by 0.5 percent, while the U.K.'s FTSE 100 finished flat but with a slight upward tendency.
The material has been provided by InstaForex Company -
www.instaforex.com
