European Shares Seen Steady At Open

European Shares Seen Steady At Open

December 18, 2023

European stocks may open on a firm note Tuesday, though overall gains are likely to remain capped ahead of the release of U.S. consumer price inflation report later in the day and Wednesday’s Fed policy decision.

Trading later in the day will be driven by reaction to a report on U.S. CPI data for November that may show inflation still cooling but staying well above the Fed’s 2 percent annual target.

The Federal Reserve is widely expected to hold rates on Wednesday, with the spotlight squarely on the central bank’s dot plot and summary economic projections as well as comments from Chair Jerome Powell during his press conference.

Reports on producer price inflation along with reports on retail sales and industrial production will be in focus later in the week after last Friday’s strong than expected jobs data forced traders to lower bets for U.S. rate cuts to May from March 2024.

The European Central Bank (ECB), Bank of England (BoE), Norges Bank and the Swiss National Bank all will announce their monetary policy decisions on Thursday.

Analysts currently expect the ECB to announce its first interest-rate cut in June 2024. The BoE may announce its first rate cut in August.

Asian markets traded mostly higher, and the dollar held steady while gold edged up slightly after touching a three-week low in the previous session.

Oil prices were seeing some support, thanks to U.S efforts to replenish strategic reserves.

The yield on the 10-year Treasury held steady at 4.22 percent after lackluster three- and 10-year note auctions on Monday.

U.S. stocks rose modestly overnight to close at new highs for the year amid continued optimism that the Fed is done with rate hikes and could potentially cut rates in the first half of next year.

The Dow and the S&P 500 both gained around 0.4 percent while the tech-heavy Nasdaq Composite edged up 0.2 percent.

European stocks closed mostly higher on Monday after struggling for direction during much of the session.

The pan European STOXX 600 advanced 0.3 percent. The German DAX inched up 0.2 percent and France’s CAC 40 rose 0.3 percent while the U.K.’s FTSE 100 slipped 0.1 percent.

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