Market Considerations and Analytics
Key Notes
In anticipation of next week’s critical central bank meetings, investors are worried about the status of the global economy and expect the European stock markets to trade in a range on Thursday.
The DAX futures contract in Germany, the CAC 40 futures contract in France, and the FTSE 100 futures contract in the United Kingdom all traded 0.1% firmer at 02:00 ET (07:00 GMT).
As the week draws to a close, European investors are likely to remain on edge after being alarmed by pessimistic remarks from senior bank executives who predicted that tighter monetary circumstances will probably lead to a worldwide downturn in 2023.
The U.S. Federal Reserve and the European Central Bank both have policy-setting meetings the following week, and both are anticipated to raise interest rates once more to combat the inflation that is still at high levels.
The Federal Reserve is anticipated to raise interest rates by 50 basis points starting next week. While this would be a lesser rise than recent rate increases, investors are growing anxious that this would just result in a lengthier rate-hike cycle.
A hardline faction inside the ECB is pushing for a third consecutive hike of 75 basis points despite the fact that inflation in the Eurozone dropped for the very first time in 18 months. The ECB is also expected to raise interest rates further 50 basis points.
The primary driver of the crude market, however, continues to be concerns about the expansion of demand, particularly from the U.S. market, the largest consumer in the world.
By 2:00 ET, Brent crude prices were up 1.4% to $78.28, while U.S. crude futures were 1.6% higher at $73.19 per barrel.
On Wednesday, Brent reached a closure drop for the year that was last touched on January 1, 2022, while the U.S. contract hit a new low for the year.
Gold futures also increased to $1,798.30/oz, and EUR/USD traded 0.1% higher at 1.0514.
