European Shares Set To Rise On Dovish Fed

European stocks are set to open higher on Thursday as dovish signals from the Federal Reserve bolstered the allure of riskier assets.

The Fed held interest rates steady and removed a reference to the central bank’s plan for further gradual rate increases in its policy statement, signaling cautious approach to rate hikes amid a slowing economy.

The dollar fell versus its peers after Fed Chair Jerome Powell said the case for raising rates has weakened somewhat.

Gold held near eight-month highs hit in the previous session, while oil extended gains after hitting two-month highs overnight amid signs of tightening supply.

Asian stocks hit a four-month high as the Fed’s dovish tone helped investors shrug off weak manufacturing data from China.

Activity in China’s vast manufacturing sector continued to contract in January, albeit at a slower pace, the latest survey from the National Bureau of Statistics showed with a PMI score of 49.5.

That beat expectations for a score of 49.3 and was up from 49.4 in December. The non-manufacturing index came in at 54.7, topping forecasts for 53.9 and up from 53.8 in the previous month.

The United States and China launched high-level trade talks in Washington on Wednesday, just two days after the U.S. Justice Department unveiled a raft of charges against Chinese telecommunications company Huawei.

Overnight, U.S. stocks surged to close at their best levels in nearly two months as investors reacted positively to earnings news from big-name companies like Boeing and Apple, and the Fed’s dovish policy stance.

Economic reports painted a mixed picture showing stronger than expected private sector job growth but an unexpected decrease in pending home sales.

The Dow Jones Industrial Average rallied 1.8 percent, the tech-heavy Nasdaq Composite jumped as much as 2.2 percent and the S&P 500 added 1.6 percent.

Microsoft shares slipped in extended trading after its second-quarter revenue came in slightly lower than expected. On the other hand, Facebook reported extremely strong financial results.

Qualcomm’s earnings handily beat Wall Street estimates and Visa beat expectations on the top and bottom, while Tesla’s quarterly profit fell short of expectations.

European markets ended mostly higher on Wednesday, as encouraging comments from Apple CEO Tim Cook outweighed concerns about Brexit and U.S.-China trade talks.

The pan European Stoxx 600 rose 0.4 percent. France’s CAC 40 index climbed 1 percent and the U.K.’s FTSE 100 jumped 1.6 percent while the German DAX dropped 0.3 percent.

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