European stocks are predicted to begin slightly higher on Thursday due to speculation that the Federal Reserve (Fed), European Central Bank (ECB), and Bank of England (BoE) will implement interest rate cuts at their forthcoming June meetings.
Federal Chair, Jerome Powell, on Wednesday intimated a potential reduction in the benchmark interest rate later in the year. However, he emphasized that additional evidence to substantiate inflation easing was needed. On the other hand, Raphael Bostic, Atlanta Fed President, displayed concern regarding inflation rates, suggesting a rate decrement in the fourth quarter may be necessary.
As predicted by the CME FedWatch Tool, there is a 99% likelihood of interest rates remaining constant at the Fed's May policy meeting, and a 62.3% chance of rate reduction at the June convention. Conversely, Robert Holzmann from the ECB suggested the central bank may begin interest rate cuts in June but cautioned against moving too rapidly ahead of the U.S.
The British pound remained weak, lingering near a four-month low due to predictions that the BoE will implement more interest rate cuts than the Fed this year.
In regards to economic releases, investors will be anticipating Eurozone producer price data and Composite PMI figures later in the day. While in the U.S., weekly jobless claims and trade deficit reports await review, although there will likely be a lull in trading activity ahead of Friday's more anticipated monthly jobs statistics.
Asian stocks trended mostly higher, while financial markets in China, Taiwan, and Hong Kong were closed due to a public holiday.
The U.S. dollar receded from a recent four-month high as gold persisted with its record-breaking rally, trading above $2,300 per ounce. Meanwhile, crude oil continued to gain due to supply risks precipitating from Ukrainian attacks on Russian oil refineries and potential escalation in Middle East conflicts.
U.S. stocks had a modest close, as Fed officials underlined the importance of further debate and data prior to implementing rate cuts. Notably, private sector job growth increased at its fastest pace in several years, while the rate of services industry growth decelerated.
The Dow ended with a 0.1% loss, marking three consecutive days of decline; whereas the S&P 500 rose by a slight 0.1% and the tech-heavy Nasdaq Composite climbed by 0.2%.
On Wednesday, European stocks had a stronger close after a March report showed a steeper-than-expected slump in Eurozone inflation. The pan-European STOXX 600 and France's CAC 40 each rose by 0.3%. German's DAX also advanced by half a percent, and the UK's FTSE 100 finished marginally higher.
