European stocks look set to extend gains from the previous session on Friday as investors assess the inflation and monetary policy outlook.
After Fed Chair Jerome Powell delivered an uncharacteristically strong message about how the Fed plans to combat entrenched inflation, U.S. interest rate are now almost certain to go up by 75 bps at the September 20-21 Fed meeting.
Asian markets followed Wall Street higher and U.S. Treasury yields continued to rise, while the dollar eased against a basket of currencies on improved risk sentiment.
Gold prices rose on dollar weakness, while oil extended overnight gains amid Russia’s threat to halt oil and gas exports to any country that backs a price cap on its crude. Oil still headed for a back-to-back weekly loss on demand worries.
EU energy ministers are meeting in Brussels today to thrash out a common approach to fight surging electricity and gas prices.
Across the Atlantic, traders are likely to keep an eye on comments from several Fed officials.
Data released earlier today showed that China’s consumer inflation rose at a slower-than-expected pace in August and the rate of producer price inflation hit an 18-month low.
U.S. stocks ended a choppy session higher overnight despite Powell reiterating the central bank’s commitment to aggressively fight inflation to bring it back down to 2 percent.
The Dow and the tech-heavy Nasdaq Composite both gained around 0.6 percent, while the S&P 500 added 0.7 percent.
European stocks closed higher on Thursday, led by banks as the ECB raised its key interest rates by an unprecedented 75 basis points, and signaled further tightening in the coming months to tackle record inflation.
Investors also reacted to Powell’s warning about the dangers of allowing elevated prices to become entrenched.
The pan European Stoxx 600 advanced half a percent. The German DAX finished marginally lower, while France’s CAC 40 index and the U.K.’s FTSE 100 both inched up around 0.3 percent.
Source: Read Full Article