European Stock Futures Mixed; BOE in Spotlight After Fed Hike

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European Stock Futures Mixed; BOE in Spotlight After Fed Hike

By Peter Nurse - European stock markets are expected to open mixed Thursday as investors digest the Federal Reserve’s latest hefty interest rate hike ahead of a policy meeting from the Bank of England.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.4%, while the FTSE 100 futures contract in the U.K. fell 0.9%.

The U.S. central bank on Wednesday announced its biggest interest rate hike  since 1994, lifting the target federal funds rate by 75 basis points while also pointing to further steady rises this year.

This move had been largely priced in following last week’s dramatic rise in U.S. consumer prices for May, but Wall Street took some comfort from the idea that the Fed was attempting to get inflation under control.

Also helping were comments by Jerome Powell at the associated press conference, with the Fed Chair stating that he did not expect further hikes of 75 basis points to be common.

The Bank of England holds a policy-setting meeting later Thursday and is expected to hike interest rates by 25 basis points for the fifth consecutive meeting as it attempts, like central banks around the world, to curb soaring inflation. 

However, there are some concerns that the Bank of England will be tempted to follow the Fed’s path and announce a more aggressive rate hike with inflation at 9% in the 12 months to April, the highest rate for 40 years.

Economic data releases in Europe include new EU car registrations for May as well as Italian inflation data for May. 

In corporate news, Ryanair (IR: RYA ) could be in focus after unions representing Italian staff and cabin crew for the budget airline called a 24-hour strike for June 25, coinciding with walkouts in Spain and Portugal as well as potentially France and Belgium.

Additionally, Swiss drugmaker Roche (SIX: RO ) announced a setback in the development of its Alzheimer's medicine crenezumab as a study showed it did not slow or prevent cognitive decline in people with a specific genetic mutation that causes early onset of the disease.

Oil prices edged higher Thursday, rebounding after sharp losses during the previous session, supported by tight supply and strong global demand. 

Prices slipped more than 2% overnight after the Federal Reserve hiked interest rates, but the sentiment in the market overall remains bullish as global supply is crimped by sanctions on Russian oil while demand in China, the world’s largest importer, is set to rebound from COVID restrictions.

U.S. crude stocks rose in the week through June 10, data from the U.S. Energy Information Administration showed Wednesday, but gasoline inventories fell as demand from American drivers remained strong despite the record prices. 

By 2 AM ET, U.S. crude futures traded 0.5% higher at $115.91 a barrel, while the Brent contract rose 0.3% to $118.91. 

Additionally, gold futures rose 0.8% to $1,833.65/oz, while EUR/USD traded 0.1% lower at 1.0432.

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