European Markets Seen Extending Gains

stockmarkets jan23 27jan23 lt

Markets in Europe are expected to open on a firm note on Friday and add to Thursday's gains as markets weigh the latest growth data from the U.S. as well as the health of the corporate sector. The American economy grew at 2.9 percent in the fourth quarter versus expectations of a 2.6 percent growth. However, gains could be limited by anxiety ahead of the release of the PCE-based inflation readings from the U.S., as well as the ongoing earnings updates and interest rate reviews by the Fed, ECB and BoE next week.

Bullish sentiment prevailed in Wall Street on Thursday as the higher-than-expected GDP numbers from the U.S. raised hopes of a soft landing for the economy, despite an aggressive monetary tightening path pursued by the Fed. Better-than-expected earnings releases also supported the rally. The Nasdaq Composite surged 1.76 percent to close at 11,512.41 and the Dow Jones Industrial Average rallied 0.61 percent to finish trading at 33,949.41.

The positive sentiment from the U.S. GDP surprise spilled over to the European markets as well. Strong earnings scorecard as well as hopes of the Fed slowing down on rate hikes added to the positive sentiment. Markets in the region closed mostly higher on Thursday with the pan-European Stoxx-600 gaining 0.42 percent. France's CAC 40 surged 0.74 percent, Germany's DAX added 0.34 percent whereas U.K.'s FTSE 100 gained 0.21 percent. Switzerland's SMI however dropped 0.76 percent.

Current indications from the European stock futures imply continuation of the positive momentum. The DAX Futures (Mar) is currently trading 0.32 percent higher. The FTSE 100 Futures (Mar) is currently trading 0.18 percent higher. The CAC 40 Futures (Feb) had closed 0.81 percent higher on Thursday.

American stock futures are in mildly negative territory. The US 30 (DJIA) is down 0.03 percent whereas the US500 (S&P 500) is 0.23 percent lower.

Asian stock markets are trading mostly higher as the positive GDP surprise from the U.S. quelled fears of a recession and added to hopes of a demand boost from China. South Korea's KOSPI has added 0.65 percent. Hong Kong's Hang Seng extended gains with a 0.34 percent uptick. Australia's S&P ASX 200 has also added 0.34 percent. New Zealand's NZX 50 gained 0.10 percent. Japan's Nikkei 225 edged up 0.04 percent. India's Nifty 50 has declined more than 1 percent. Markets in China are closed for a holiday.

The Dollar Index (DXY), a measure of the Dollar's strength relative to six currencies, is currently at 101.97, up 0.13 percent on an overnight basis. The EUR/USD pair decreased 0.19 percent to 1.0868 whereas the GBP/USD pair added 0.21 percent to trade at 1.2380.

Gold Futures for February settlement are trading 0.34 percent lower at $1,923.35 per troy ounce as the resilience of the U.S. economy dampened bullish sentiment on the yellow metal. The previous close was at $1,930.00.

Crude prices firmed up as a higher-than-expected GDP growth in the U.S. buoyed hopes of a demand boost from the region as well as from China. Brent Crude Futures for March settlement has increased 0.35 percent to $87.78 whereas WTI Crude Futures for March settlement has increased 0.42 percent to $81.35.

Consumer Confidence reading for January is due from France on Friday. Markets are expecting a reading of 83 versus the previous reading of 82. The European Central Bank would be releasing the statistics related to M3 Money Supply, Loans to Companies, Loans to Households etc. ECB president Christine Lagarde is scheduled to deliver a speech which would be keenly watched ahead of the impending monetary policy review.

Major earnings updates due from the region include Remy Cointreau, Tate & Lyle, Ubisoft, Britvic, Paragon Banking Group and Oxford Instruments.

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