European Shares Set To Open On Firm Note On Rate Cut Hopes

European stocks are set to open on a firm note Friday amid hopes that the U.S. Federal Reserve will start reducing interest rates from the first quarter of next year.

Softer than expected eurozone inflation data also raised hopes the European Central Bank will begin cutting rates from early next year.

The dollar was on the back foot while bond yields were largely unchanged after New York Fed President John Williams said Thursday that policymakers are likely done with interest-rate hikes, but decisions will continue to be data-dependent.

Gold prices were seeing modest gains in Asian trade while oil extended sharp overnight losses amid concerns that worsening economic conditions in China will dent fuel demand.

Also, there are concerns that OPEC+ might find it tough to follow through and reduce output, as the output cuts announced on Thursday are voluntary and not mandatory.

Asian stocks traded mostly lower as mixed factory activity data from China highlighted the need for stronger stimulus to shore up economic growth.

A private gauge of China’s factory activity unexpectedly swung to expansion in November, contrasting with the official index that signaled a contraction.

The U.S. economic calendar remains light today, with remarks by Federal Reserve Chair Jerome Powell as well as a report on U.S. manufacturing activity awaited.

U.S. stocks ended mostly higher overnight, buoyed by signs of easing inflation and strong Q3 earnings from Salesforce.

U.S. consumer spending moderated in October, the Fed’s preferred inflation measure eased in the month and weekly jobless claims rose slightly, signaling that interest rate cuts are on the horizon.

The Dow jumped 1.5 percent to reach a new high for the year and the S&P 500 gained 0.4 percent to hit a three-month closing high while the tech-heavy Nasdaq Composite slipped 0.2 percent.

European stocks closed on a firm note Thursday after data showed a surprise drop in euro zone inflation in November.

The pan European STOXX 600 advanced 0.6 percent. The German DAX edged up 0.3 percent, France’s CAC 40 added 0.6 percent and the U.K.’s FTSE 100 inched up 0.4 percent.

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