European Shares Seen Up Post Fed MeetingDecember 22, 2021
European stocks are seen opening higher on Thursday after the Federal Reserve signaled a faster bond tapering and said it expects as many as three interest rate hikes in 2022 to tackle rising inflation. But the positive news is that the Fed expects inflation to cool off.
Asian markets traded mixed, with U.S.-China tensions in focus after the U.S. House of Representatives passed a resolution to ban imports from China’s Xinjiang region over concerns about the use of forced labor and other abuses.
Additionally, media reports suggest that the U.S. may put further sanctions on Chinese’s biggest chipmaker SMIC.
On the Covid-19 front, European Commission President Ursula von der Leyen said that Omicron is expected to be the dominant coronavirus variant in the European Union nations by mid-January.
Globally, more than 75 countries have reported confirmed cases of omicron. In the United States, 36 states have detected the variant. Apple has delayed the date by which its corporate employees will return to office.
Bond yields rose and gold edged higher on dollar weakness, while oil prices rose about 1 percent after the weekly EIA oil inventory report showed demand for petroleum products hit a record high.
It’s a particularly busy day ahead on the Eurozone’s economic calendar, with prelim December private sector PMIs for France, Germany, and the Eurozone likely to be in focus.
The European Central Bank, the Bank of England, as well as the Swiss National Bank and Norges Bank will hold policy meetings later in the day, and possibly convey a tightening of policy to counter broadening inflationary risks.
Across the Atlantic, traders are likely to keep an eye on reports on weekly jobless claims, housing starts and industrial production.
U.S. stocks rallied overnight after the Fed announced its widely expected decision to trim its bond purchases by $30 billion per month.
While the central bank’s latest projections forecast as many three rate hikes in 2022, Fed Chair Jerome Powell stressed that the Fed’s policies are flexible and adaptable to any change in its economic outlook.
In particular, he warned that any resurgence in Covid-19 could slow down the need for a rate hike.
The tech-heavy Nasdaq Composite soared 2.2 percent, the Dow climbed 1.1 percent and the S&P 500 surged 1.6 percent.
European markets ended mostly higher on Wednesday, helped by gains in technology and healthcare stocks.
The pan European Stoxx 600 gained 0.3 percent. The German DAX edged up 0.2 percent and France’s CAC 40 index rose half a percent, while the U.K.’s FTSE 100 dropped 0.7 percent after data showed consumer prices jumped to their highest in a decade.
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