European Markets Seen Opening Weak Ahead Of Fed Decision

Markets in Europe are expected to open weak on Wednesday amidst a renewed focus on the Fed ahead of announcement of the Fed’s interest rate decision as well as forward guidance. Anxiety ahead of the announcement by the ECB on Thursday and fears of a fresh banking crisis contagion is also seen swaying market sentiment.

Wall Street had closed deep in the red on Tuesday amidst a selloff in US regional banks, weak jobs data as well as a firm focus on the Fed’s expected 25 basis-points rate hike and forward guidance. Data showed job openings drop to 9.6 million in March, the lowest since April 2021 and below market expectation of 9.8 million. The Nasdaq Composite shed 1.08 percent to close at 12,080.51. The Dow Jones Industrial Average lost 1.08 percent to finish trading at 33,684.53.

The negative sentiment from Wall Street as well as the sharp fall in crude oil prices impacted sentiment at the European bourses and markets in the region closed with deep losses on Tuesday. France’s CAC 40 plunged 1.45 percent. The pan-European Stoxx-600, U.K.’s FTSE 100 and Germany’s DAX, all shed around 1.2 percent. Switzerland’s SMI finished 0.12 percent lower.

Current indications from the European stock futures indicate a weak sentiment. The DAX Futures (Jun) is currently trading 0.15 percent higher. The FTSE 100 Futures (Jun) is currently trading 0.01 percent higher. The SMI Futures (Jun) had closed flat on Tuesday. The CAC 40 Futures (May) had closed 1.08 percent lower whereas the pan-European Stoxx 50 Futures (Jun) had closed 0.07 percent higher on Tuesday.

American stock futures are however trading in positive territory. The US 30 (DJIA) is up 0.20 percent whereas the US500 (S&P 500) is trading 0.21 percent higher.

Asian stock markets are trading mostly lower amidst rate hike fears and fears of a fresh banking crisis. Hong Kong’s Hang Seng has dropped close to 2 percent. Australia’s S&P ASX 200 dropped 1.14 percent. New Zealand’s NZX 50 has also declined more than 1 percent. South Korea’s KOSPI has lost close to a percent. India’s Nifty 50 has shed 0.39 percent. Markets in China and Japan are closed for a holiday.

The Dollar Index (DXY), a measure of the Dollar’s strength relative to six currencies, slipped further to 101.73, down 0.22 percent on an overnight basis amidst weak jobs data, banking sector stress and fears of a painful recession. The EUR/USD pair has increased 0.19 percent to 1.1020 whereas the GBP/USD pair has gained 0.21 percent to trade at 1.2490.

Gold prices gained on safe haven buying following fresh sell off in U.S. bank stocks. Gold Futures for June settlement are trading at $2,024.55 per troy ounce, up 0.06 percent on an overnight basis.

Crude prices declined further as worries about interest rate hikes and concerns over the depth of China’s rebound dampened positive sentiment created by the more-than-expected draw in crude oil inventories in the U.S. Brent Crude Futures for June settlement decreased 0.12 percent to $75.23 whereas WTI Crude Futures for June settlement decreased 0.18 percent to $71.53.

Euro Area’s unemployment rate, due on Wednesday is seen steady at 6.6 percent. Services PMI data for April from the U.S would be known before the Fed announces its interest rate decision.

Major earnings updates due on Wednesday from the region include Orsted, Airbus, BNB Paribas, British American Tobacco, Demant, Enel, Lundin Mining Corp, Pandora, Deutsche Post, Stellantis, Lonza Group, Unicredit, Haleon, Flutter Entertainment and Lloyds Banking Group.

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