European Stock Momentum Seen Unabated As Focus Shifts To Data, BOE And Energy Crisis

European stocks are expected to open strong on Thursday post the FOMC’s status quo on rates and the announcement of a moderation in asset purchases that would be contingent on the progress towards employment and price stability goals. The Federal Reserve had on Wednesday reiterated its accommodative monetary stance while acknowledging the transitory nature of the elevated inflation and the virus dependent course of the economy. Post the FOMC outcome, focus in Europe is likely to shift to the slew of data releases, BOE policy review, energy crisis, etc.

Overnight, Wall Street had jumped after the much-anticipated policy announcements by the Fed. Nasdaq-100 rallied 0.99 percent to close at 15,176.51, whereas Dow Jones Industrial Average moved up further by 1.00 percent to end at 34,258.32.

On Wednesday, the European markets had recovered smartly ahead of the FOMC Policy outcome. U.K.’s FTSE100 was the best performer gaining 1.47 percent as peers like France’s CAC-40 gained 1.29 percent, German DAX rallied 1.15 percent, pan-European Stoxx 600 advanced 0.99 percent; and Switzerland’s SMI 20 increased by a modest 0.41 percent.

Dollar index has now retreated to 93.35 from 93.46 at Thursday’s close in the absence of an aggressive tapering timeline by the Fed. In tandem, the EURUSD pair has increased to 1.1710 from the previous close of 1.1686 while the GBPUSD pair has moved up to 1.3647 from the previous close of 1.3625.

Gold futures for December settlement are trading at $1766.35 per troy ounce, about 0.70 percent lower than the previous close of $1778.80 reflective of potentially waning interest in the yellow metal in an interest rate hardening scenario.

WTI Crude for November settlement is trading at $72.36, up 0.18 percent from the previous close whereas Brent Crude for November settlement is trading at $76.38, up 0.25 percent from the previous close. The surge in oil prices is attributed to the growing oil demand, declining supplies post two hurricanes in the U.S. as well as risk-appetite post easing Evergrande scenario.

American stock futures are in positive territory. Nasdaq 100 stock futures is showing an uptick of 0.21 percent whereas the Dow Jones Futures is currently trading at a gain of 0.31 percent.

Asian markets are mostly trading in positive territory on Thursday. Australia’s S&P ASX 200 is higher by 1.15 percent; India’s BSE Sensex is up by 1.06 percent; Hong Kong’s Hang Seng is higher by 0.84 percent; New Zealand’s NZX 50 is gaining 0.68 percent; and China’s Shanghai Composite is up by 0.41 percent. On the other hand, South Korea’s Kospi is down by 0.36 percent. Markets in Japan are closed for local holidays.

Earnings updates are due from U.K.-based oil and gas company Harbour Energy, Isle of Man-based gaming software company Playtech, U.K.-based grocery related real estate investment trust Supermarket Income REIT, Australia-based copper, gold exploration and development company SolGold, U.K.-based upholstery retailer DFS Furniture, France-based automotive equipment maker Akwel, U.K.-based Renalytix Plc that develops artificial intelligence-enabled in vitro diagnostic solutions for kidney diseases etc.

While there are a lot of data points that would be unveiled today, the key metric that markets across Europe would be keenly watching is the monetary policy, interest rate decision, and review of quantitative easing by the Bank of England.

Economic indicators for September due today from France include Business Confidence (forecast 108; previous 110), Markit Manufacturing PMI Flash (forecast 56.5; previous 57.5) and the Markit Services PMI Flash (forecast 55.7; previous 56.

Germany also awaits the Markit PMI flash readings for September today. Manufacturing PMI is forecast at 60.9, a decline from the previous reading of 62.6 whereas Services PMI is forecast at 60 versus previous number of 60.8.

Swiss National Bank’s Interest Rate Decision and European Central Bank’s General Council Meeting are also scheduled for the day.

Euro Area Markit Manufacturing PMI flash for September is forecast to decline to 59.9 from 61.4 previously. The corresponding Service number is forecast at 58.6 as compared to 59 previously.

U.K. is awaiting the Markit/CIPS PMI flash for September. Manufacturing is forecast as dipping to 59 from60.3 previously while Services is seen edging up to 55.1 from 55 previously.

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