European markets are projected to open lower on Thursday as investors consider recent decisions by the Federal Reserve and the Bank of Japan regarding interest rates, while anticipating the upcoming policy announcement from the Bank of England.
On Wednesday, the U.S. Federal Reserve reduced its key lending rate by 25 basis points, in line with expectations. However, the Fed updated its forecasts, now anticipating only two interest rate reductions next year, down from the previously predicted four, due to persistently high inflation.
This more aggressive stance from the Fed drove benchmark U.S. Treasury yields to a seven-month high and propelled the dollar to a two-year peak, reducing investors' inclination toward riskier investments.
Fed Chair Jerome Powell emphasized the necessity for caution, heightening investor concerns that fiscal, trade, and tariff policies under former President Trump may exacerbate inflation, potentially maintaining elevated U.S. interest rates for an extended period.
Meanwhile, the Japanese yen weakened as the Bank of Japan opted against raising interest rates, citing ongoing uncertainties impacting Japan's economic outlook and pricing strategies.
The Bank of England is anticipated to maintain interest rates at 4.75 percent later today, following November's inflation figures surpassing the central bank's target.
Economic data releases that may capture investor focus today include the German Gfk consumer climate report, German PPI, and the French business climate index.
In the U.S., market activity could be influenced by the release of weekly jobless claims, existing home sales, and Philadelphia Fed manufacturing data, alongside the eagerly awaited final revision of Q3 GDP figures.
Asian markets largely mirrored Wall Street's upward movement, while gold rebounded from a one-month low. Oil prices declined during Asian trading amid the Fed's revised policy stance and concerns about China's economic growth.
Reports indicate U.S. officials are contemplating a ban on China's TP-Link Technology Co due to potential national security threats.
U.S. stocks underwent significant selling pressure overnight amid ambiguity over the Fed's future rate path.
The Dow Jones Industrial Average dropped 2.6 percent, marking a ten-session losing streak and its lowest closing level in over a month. The S&P 500 fell 3 percent to its lowest close in a month, while the tech-centric Nasdaq Composite tumbled 3.6 percent.
European stocks mostly finished in positive territory on Wednesday, buoyed by U.K. and Eurozone inflation data releases, preceding the Fed's year-end rate decision.
The pan-European STOXX 600 increased by 0.2 percent, recording its first gain in four days. Germany's DAX ended slightly lower, whereas France's CAC 40 rose by 0.3 percent, and the U.K.'s FTSE 100 edged up slightly.
The material has been provided by InstaForex Company -
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