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European Markets Likely To Open On Weak Note

stockmarkets jan11 17sep20 lt

The overnight late-session pull back on Wall Street, and lower U.S. and European futures point to a weak start for European markets Thursday morning.

Brexit woes and concerns about surging coronavirus cases are among the other factors that could weigh on the markets.

The Bank of England's monetary policy announcement is the key economic event for the European markets today.

As widely expected, the U.S. Federal Reserve left its rates unchanged on Wednesday and said the low interest regime will continue through 2023.

The Fed's latest estimates point to a 3.7% contraction in GDP in 2020, reflecting an improvement from the 6.5% plunge forecast in June. However, the Fed downwardly revised its estimates for GDP growth in 2021 and 2022 to 4% and 3%, respectively. GDP growth in 2023 was forecast at 2.5%.

In his post monetary-meeting press conference, Federal Reserve Chairman Jerome Powell reiterated that the economic downturn resulting from the pandemic is "the most severe in our lifetime," and said fiscal stimulus from Congress is necessary to sustain the economic recovery.

The BoE is scheduled to announce its monetary policy at 7.00 am ET. Economists expect the bank to hold its key rate at a record low of 0.1%, and asset purchase programme at GBP 745 billion. There are expectations that the central bank might consider additional stimulus to limit the impact of the virus pandemic and Brexit woes on the economy.

Much earlier, at 2.00 am ET, the European Automobile Manufacturers' Association is slated to publish Europe's new car registration data for July/August, and Switzerland's statistical office will release the foreign trade data for August. In July, Swiss trade surplus came in at CHF 2.58 billion.

At 3.00 am ET, HICP figures are due from Austria and Slovakia, and at 4.00 am ET, gross wages data from Poland, and foreign trade data from Italy are due.

Eurostat will release euro area final consumer price data for August, at 5.00 am ET. According to preliminary estimate, consumer prices had dropped 0.2% annually, reversing a 0.4% rise in July.

On Wednesday, most of the markets across Europe ended on positive note. Among the major markets, Germany and France closed higher, while the U.K. market ended weak.

The pan European Stoxx 600 ended up 0.58%. Germany's DAX advanced 0.29% and France's CAC 40 edged up 0.13%, while the U.K.'s FTSE 100 slid 0.44%. Switzerland's SMI moved up 0.3%.

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