European Shares Seen Up On China Stimulus Hopes

European stocks are likely to open higher on Thursday after data showed China’s consumer prices rose at the slowest pace in more than two years in April, and factory gate deflation deepened, fueling debate over the need for additional stimulus to support a patchy post-COVID economic recovery in the country.

Asian markets traded mixed after the Walt Disney Company missed fiscal Q2 earnings estimates slightly.

The U.S. debt ceiling impasse weighed, with President Joe Biden warning that the post-pandemic economy would be destroyed by a government default.

The U.S. government will be unable to pay its bills by June 1 if the debt limit is not raised.

The dollar index and gold were little changed while oil prices rose about 1 percent in Asian trade on positive U.S. fuel demand data.

Trading later in the day may be impacted by U.S. reports on producer price inflation and weekly jobless claims.

The Bank of England policy announcement is due, with economists expecting another 25-bps rate hike.

U.S. stocks ended mixed overnight as data showed consumer inflation fell below 5 percent for the first time in two years. So-called core inflation also eased, giving the Federal Reserve room to pause interest-rate increases soon.

The S&P 500 rose half a percent and the tech-heavy Nasdaq Composite rallied 1 percent while the Dow slid 0.1 percent as regional banks extended declines on concerns about the health of the banking sector.

European stocks ended Wednesday’s session broadly lower after leaders in Washington failed to make progress on a debt ceiling deal.

The pan European STOXX 600 gave up 0.4 percent. The German DAX slipped 0.4 percent, France’s CAC 40 shed half a percent and the U.K.’s FTSE 100 eased 0.3 percent.

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