European Shares May Open On Soft Note On Hawkish Fed Minutes

European stocks are likely to open on a tepid note Thursday, as investors react to hawkish Fed minutes and keep a wary eye on the COVID-19 situation in China.

The dollar index traded weak despite the latest Fed minutes indicating officials intend to keep hiking rates in 2023 and would not ease policy until prices are under control.

Gold dipped slightly while oil prices rose over 1 percent after plunging around 9 percent in the previous two sessions on concerns about the demand outlook in the United States and China.

Asian markets traded mostly higher in cautious trade as hopes for a strong economic recovery in China dwarfed worries over COVID spike and an impending global recession.

China’s COVID data is not giving an accurate picture of the situation there and underrepresents the number of hospitalizations and deaths from the disease, Mike Ryan, WHO’s emergencies director, told reporters in Geneva.

China’s central bank said on Wednesday it would keep liquidity reasonably ample and implement a targeted and prudent monetary policy in 2023 to spur domestic consumption and key investment projects.

In economic releases, China’s services activity shrank in December, but the pace of recent declines slowed, and business confidence reached a 17-month high, a private survey showed.

German trade and euro area inflation figures will be in focus later in the day.

Across the Atlantic, trading may be impacted by reports on weekly jobless claims, private sector employment and the U.S. trade deficit ahead of the closely watched nonfarm payrolls data on Friday.

U.S. stocks fluctuated before eventually finishing higher overnight, as latest data revealed contraction in manufacturing activity and the minutes from the Fed’s December policy meeting showed interest rates will stay high through 2023 to curb “unacceptably high” inflation.

The Dow edged up 0.4 percent, the tech-heavy Nasdaq Composite gained 0.7 percent and the S&P 500 added 0.8 percent.

European stocks closed on a buoyant note Wednesday amid more positive economic data and signs of cooling inflation in the region.

The pan European STOXX 600 jumped 1.4 percent. The German DAX surged 2.2 percent, France’s CAC 40 index rallied 2.3 percent and the U.K.’s FTSE 100 rose 0.4 percent.

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