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European markets are expected to nosedive at the open Thursday, following their global counterparts lower after the U.S. Federal Reserve signalled yesterday that few rates cuts are on the horizon.
The U.K.'s FTSE 100 index is expected to open 84 points lower at 8,105, Germany's DAX down 265 points at 19,993, France's CAC down 105 points at 7,284 and Italy's FTSE MIB down 507 points at 33,876, according to data from IG.
The anticipated lower open for Europe comes follows a Wednesday sell-off on Wall Street after the Fed, which cut its overnight borrowing rate by 25 basis points to a target range of 4.25% to 4.5%, signalled there will likely only be two rate cuts in 2025, rather than the four cuts indicated in its previous forecast.
"We moved pretty quickly to get to here, and I think going forward obviously we're moving slower," Fed Chair Jerome Powell said at the post-meeting press conference.
The comments prompted panic on Wall Street, with U.S. stocks plunging as bull market sentiment was dealt a blow. Overnight, Asia-Pacific markets and currencies also fell.
There's more central bank action in Europe Thursday with monetary policy decisions due from the Bank of England and Norges Bank, the central bank of Norway.
Investors will also be keeping an eye on European new passenger car registration data, Germany's Gfk consumer confidence figures and Spanish trade data to gauge the health of the region's economy.
— CNBC's Jeff Cox contributed to this market report
German consumer sentiment set to improve in early 2025 after recovering slightly
German consumer sentiment is set to improve in January 2025 after picking up at the tail end of 2024, according to a consumer climate report from GfK and the Nuremberg Institute for Market Decisions (NIM).
The consumer sentiment index increased to -21.3 points going into January from the previous month's revised reading of -23.1 points.
"Both income expectations and the willingness to buy rose in December, while the willingness to save decreased. As a result, the consumer climate is expected to improve slightly at the beginning of the new year," the report said.
Consumer sentiment remains low, however, and a "sustained recovery" is not expected yet due to ongoing uncertainty among consumers, Rolf Bürkl, consumer expert at NIM, noted. High food and energy costs and growing job insecurity are weighing on consumers, he added.
— Sophie Kiderlin
European markets: Here are the opening calls
European markets are expected to open in negative territory Thursday.
The U.K.'s FTSE 100 index is expected to open 84 points lower at 8,105, Germany's DAX down 265 points at 19,993, France's CAC down 105 points at 7,284 and Italy's FTSE MIB down 507 points at 33,876, according to data from IG.
Investors will be keeping an eye on European new passenger car registration data, Germany's Gfk consumer confidence figures and Spanish trade data. Monetary policy decisions are due from the Bank of England and Norges Bank, the central bank of Norway.
— Holly Ellyatt
Chinese yuan weakens past 7.3 as Fed cuts interest rates and ahead of PBOC decision
Chinese offshore yuan weakened to 7.3218 on the U.S. dollar on Thursday morning after the U.S. Federal Reserve lowered its key interest rate by 25 basis points in a widely anticipated move.
The People's Bank of China is set to release its monthly fixing of benchmark lending rates on Friday.
The one-year loan prime rate, which affects corporate and most household loans, was kept at 3.1% last month and the 5-year LPR, a benchmark for mortgage rates, was maintained at 3.6%, following a cut of 25 basis points in October.
Chinese authorities vowed to adopt a "moderately loose" monetary policy stance earlier this month, prompting the market to pencil in more rate cuts ahead.
— Anniek Bao
Fed cuts rates as expected, but signals less reductions next year
The Federal Reserve trimmed its overnight borrowing rate by 25 basis points on Wednesday, in a widely anticipated move.
This brings the Fed's borrowing rate to a target range of 4.25% to 4.5%. However, the central bank indicated it would likely only cut rates twice in 2025, according to its closely watched "dot plot," down from four cuts given in its last forecast.
— Brian Evans
English (US)