LONDON-European stock markets are expected to open higher on Thursday, as investors in the region are digesting Wednesday’s decision by the Federal Reserve (Fed/FED) to speed up the reduction in monthly bond purchases.
According to IG data, the British FTSE Index rose 61 points to 7,235 at the opening, the German DAX Index rose 161 points to 15,651, France’s CAC 40 Index rose 99 points to 7,028, and Italy’s FTSE MIB Index rose 281 points to 26,974.
Global investors will digest the signal from the U.S. Central Bank on Wednesday that it will actively reduce the scale of bond purchases and expects to raise interest rates several times in 2022.
The Fed will reduce its asset purchase speed from January, and will only purchase $60 billion in bonds each month, compared with $90 billion in December.
Forecasts released overnight indicated that Fed officials expect to raise interest rates as many as three times in 2022, twice in the following year, and twice in 2024.
Recent inflation data shows that the inflation rate soared by 6.8% in November, higher than expected and the fastest growth rate since 1982. Subsequently, a decision was made to actively relax bond purchases.
The Asia-Pacific market was mixed on Thursday, and investors digested the signs that the Fed’s ultra-loose monetary policy since the beginning of the pandemic is about to end.
At the same time, US stock index futures edged higher on Wednesday night. More US economic data will be released on Thursday, including housing starts and initial jobless claims at 8:30 am Eastern Time.
There will be more central bank activities on Thursday, and the Bank of England will release its latest monetary policy decision. Data released on Wednesday showed that the UK inflation rate climbed to a 10-year high in November and may affect whether the central bank will tighten monetary policy.
The European market is also concerned about the December Purchasing Managers Index (PMI) data in the Eurozone and the United Kingdom. This data may reflect Covid restrictions and partial blockades implemented by certain countries (such as Germany and the Netherlands).
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— Tanaya Macheel and Saheli Roy Choudhury of CNBC contributed to this report.
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