European Shares Seen Little Changed At Open With Focus On BoE

European stocks are seen opening largely unchanged on Thursday, as investors await Chair Jerome Powell’s second day of testimony on Capitol Hill and the Bank of England’s interest-rate decision later in the day.

After Powell flagged more rate hikes overnight, CME Group’s FedWatch Tool currently indicates a 74.4 percent chance the Fed will raise rates by another quarter point following its next meeting in late July.

Altogether, the U.S. central bank is likely to raise rates two more times this year.

The Bank of England is expected to raise rates by 25 basis points later in the day. Some economists expect a 0.5 percentage rise, a day after inflation data came in higher than expected.

The Swiss National Bank will also announce its monetary policy decision and markets expect the bank to raise its policy rate by 50 basis points to 1.75 percent.

In economic releases, business sentiment survey results from France along with U.S. reports on weekly jobless claims, existing home sales and leading economic indicators may attract investor attention later in the day.

Asian stocks traded mixed, with markets in China, Hong Kong and Taiwan closed for a holiday.

Sino-U.S. tensions returned to the fore after Chinese President Joe Biden referred to Chinese President Xi Jinping as a dictator and called China a country with “real economic difficulties”.

Meanwhile, Fitch Ratings boosted its forecast for 2023 global growth but revised down its 2024 forecast, given the prospects of higher interest rates around the world.

The dollar hovered near a one-month low against a basket of currencies and gold extended recent losses, while oil dipped on profit taking after climbing on Wednesday on data showing a surprise dip in U.S. crude inventory stocks.

U.S. stocks declined overnight after Fed Chair Powell reiterated that interest rates would need to rise further to contain stubbornly elevated inflation.

The tech-heavy Nasdaq Composite tumbled 1.2 percent and the S&P 500 gave up half a percent to record their third successive session of losses while the Dow eased 0.3 percent.

European stocks ended Wednesday’s session lower on shocking inflation data from the U.K., the lack of new stimulus measures from China and hawkish signals from the Fed.

The pan European STOXX 600 shed half a percent. The German DAX rose 0.6 percent and France’s CAC 40 added half a percent while the U.K.’s FTSE 100 slipped 0.1 percent.

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