European equities are poised for a slightly lower opening on Thursday, following robust gains the previous day fueled by optimism about easing inflationary pressures in the United States.
Despite the Federal Reserve projecting just one rate cut this year, traders are still anticipating two rate decreases in 2024.
Investors are looking for more directional cues from upcoming U.S. economic data, including producer prices and weekly jobless claims set to be released later in the day.
On the domestic front, attention is focused on imminent data releases, including industrial production figures from the euro area and German wholesale price data.
Economists predict a 0.3 percent month-on-month increase in German wholesale prices for May, following a 0.4 percent rise in April. Euro area industrial production is expected to see a 0.1 percent month-on-month rise in April, after a 0.6 percent increase in March.
Asian markets exhibited mixed performance. Chinese and Japanese stocks dipped slightly after the EU announced new tariffs on Chinese electric vehicles, effective next month.
In currency markets, the dollar edged higher during Asian trading. Treasuries stabilized, and gold prices slipped toward $2,300 per ounce as investors factored in the prospect of prolonged higher interest rates from the Fed.
Meanwhile, oil prices snapped a three-day rally after an unexpected increase in U.S. crude stockpiles was reported.
In overnight trading, U.S. stocks mostly ended higher. Signs of decreasing inflation stoked bets that the Fed might lower interest rates in the coming months.
Data revealed that U.S. consumer prices rose 3.3 percent year-on-year in May, a slight drop from the previous month's rate. Notably, core prices increased at their slowest annual pace in over three years, despite rents continuing to strain household budgets.
After holding rates steady for the seventh consecutive meeting, Fed Chair Jerome Powell acknowledged that inflation has significantly eased in recent months but remains too high. The latest projections indicate officials expect only one interest rate cut this year, down from three forecasted in March. The accompanying dot plot suggests more participants favor two cuts rather than one this year, with four participants not expecting any cuts at all.
The tech-heavy Nasdaq Composite surged 1.5 percent, and the S&P 500 rose by 0.9 percent to reach new record highs. However, the Dow closed marginally lower after relinquishing its earlier gains.
On Wednesday, European stocks snapped a three-day losing streak amid growing expectations of a potential rate cut by the Federal Reserve in September. The pan-European STOXX 600 climbed 1.1 percent, while Germany's DAX rallied 1.4 percent, France's CAC 40 jumped 1 percent, and the U.K.'s FTSE 100 gained 0.8 percent.
