European stocks look set to open on a firm note Thursday after Fed Chair Jerome Powell said the Fed has the “tools” and “resolve” to do what it takes to lower inflation from the highest level in more than 40 years.
Asian markets followed Wall Street higher and the dollar retreated from a 20-year high, while gold prices received a boost from falling Treasury yields after the Fed slashed its GDP growth projection for 2022 to 1.7 percent from 2.8 percent.
Oil prices recovered some ground after having fallen nearly 5 percent over the previous two sessions.
The Bank of England’s rate-decision will be in focus later today, with economists anticipating another 25-bps rate hike – the fifth in succession – to combat soaring inflation.
The Swiss National Bank’s monetary policy decision is also due amid expectations the central bank will retain the policy rate and interest on sight deposits at the SNB at -0.75 percent.
Earlier today, the Hong Kong Monetary Authority raised its base rate by 75 basis points with immediate effect according to a pre-set formula.
Across the Atlantic, trading later in the session may be impacted by reaction to reports on initial jobless claims, housing starts and Philadelphia-area manufacturing activity.
U.S. stocks rallied overnight as the Fed intensified its drive to tame high inflation through interest-rate increases and balance sheet reduction.
After raising the target interest rate by 75 basis points – the biggest increase since 1994 – and cutting growth projection, the Fed suggested that “unusually large” moves of that scale likely wouldn’t become common.
Fed Chair Jerome Powell said he expected either a 0.50 percentage point or 0.75 percentage point increase at the Fed’s July meeting.
The S&P 500 added 1.5 percent to snap a five-day losing streak despite weak retail sales, New York factory activity and housing data. The Dow gained 1 percent and the tech-heavy Nasdaq Composite climbed 2.5 percent.
European stocks snapped their six-day losing…
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