European Shares Seen Flat To Higher In Cautious Trade

market trends2 100421 24nov22 lt

European stocks may open a tad higher on Thursday as investors react to dovish Fed minutes released overnight.

Trading activity, however, is likely to be subdued amid the Thanksgiving Day holiday in the United States. The U.S. markets will also close early on Friday.

Asian markets traded mostly higher in cautious trade as concerns about surging COVID cases in China tempered investor optimism over the Federal Reserve signaling a softer rate hike path.

China announced a record number of COVID cases on Thursday despite snap lockdowns, mass testing and travel restrictions to fight the outbreak.

On the positive side, the country signaled more monetary stimulus was on the cards, fueling speculation of another cut in in the amount of cash banks must keep in reserve.

Elsewhere, the Bank of Korea opted for a smaller rate hike and sharply cut its 2023 growth forecast, trying to strike a balance between inflation and growth.

Bond yields took a hit and the dollar weakened on improved risk sentiment as investors factor in a 50-basis-point lift at the Fed's December meeting after from four straight 75-point hikes.

Gold advanced amid light trading after the latest Fed meeting minutes revealed that Fed officials prefer slower rate hikes to evaluate the lagging effects on the economy amid the rising threat of a recession.

Oil extended losses, after having fallen more than 3 percent on Wednesday on news of a greater-than-expected build-up in U.S. gasoline inventories.

U.S. stocks rose overnight as the minutes of the Fed's early-November policy meeting showed a "substantial majority" of Fed officials supported slowing down the pace of interest rate hikes at upcoming meetings.

A few argued that it could be advantageous to wait to slow the pace of rises until the policy rate was "more clearly in restrictive territory" and that there were clearer signals inflationary pressures were receding significantly.

Economic data proved to be a mixed bag, with jobless claims increasing more than expected last week, while business activity contracted for a fifth month in November.

The Dow rose 0.3 percent to reach a seven-month closing high while the S&P 500 gained 0.6 percent and the tech-heavy Nasdaq Composite surged 1 percent.

European stocks ended firmly in positive territory on Wednesday despite PMI reports for the region pointing to a continued slowdown in business activity.

The pan European STOXX 600 advanced 0.6 percent. The German DAX finished marginally higher, France's CAC 40 index edged up 0.3 percent and the U.K.'s FTSE 100 inched up 0.2 percent.

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