European stocks are poised for a strong opening on Thursday as investors overlook elevated core U.S. inflation figures, turning their attention instead to upcoming producer price inflation and weekly jobless claims data. These metrics are being closely watched for signals on the Federal Reserve's future rate cut decisions.
Following the anticipated August inflation report, markets are increasingly confident that the Fed will reduce rates by 25 basis points next week. There is also speculation about potential further aggressive actions later this year, contingent upon job market conditions.
Simultaneously, all eyes are on the European Central Bank (ECB) as it prepares to announce its monetary policy decision later today. It is widely expected that the ECB will lower interest rates for the second time this year.
Asian markets mirrored Wall Street's upward trend, with Japan's Nikkei surging over 3 percent, snapping a seven-day losing streak. This rally was supported by a reversal in the yen from its strongest level against the dollar since December.
In the currency market, the dollar hovered near a four-week high against the euro. Meanwhile, gold saw a slight uptick, and oil prices continued their upward trajectory due to hurricane-induced disruptions and concerns about their impact on U.S. production.
After an initial drop, U.S. stocks rebounded to close higher overnight. This reversal was driven by a bounce in Brent crude prices from three-and-a-half-year lows and a key inflation report indicating a slowing growth in prices. These factors strengthened expectations for a 25-basis-point rate cut at next week's Federal Open Market Committee (FOMC) meeting.
The Nasdaq Composite, dominated by tech stocks, surged by 2.2 percent, the S&P 500 rose by 1.1 percent, and the Dow Jones Industrial Average edged up by 0.3 percent.
The consumer price index (CPI) data revealed an annual increase of 2.5 percent in August, down from 2.9 percent in July, marking the lowest rate since February 2021. The core consumer price index, which excludes volatile food and energy prices, increased by 0.3 percent from July, the largest rise in four months, and was up 3.2 percent year-over-year.
On the European front, stocks closed mixed on Wednesday as investors await cues from the ECB and Fed meetings. The pan-European STOXX 600 finished nearly flat with a slight positive inclination. Germany's DAX increased by 0.4 percent, while France's CAC 40 dipped by 0.1 percent, and the U.K.'s FTSE 100 declined by 0.2 percent.
