European Shares Seen Lower As Powell Dashes Pivot Hopes

European stocks may follow Wall Street lower on Thursday after Fed Chair Jerome Powell’s comments dashed pivot hopes.

After raising interest rates by 75 basis points, Powell struck several hawkish notes in his press conference.

Powell said thinking about pausing rate increases is “very premature’ and he was not worried about “overtightening”.

Asian markets were mostly lower as the dollar and yields firmed up following Powell’s hawkish take.

Gold prices oscillated in a narrow range, while oil fell after rising sharply on Wednesday as data showed declines in crude and gasoline stockpiles in the U.S. in the week ended October 28th.

The Bank of England (BoE) announces its rate decision later today, with economists expecting a 75-basis-point hike in the Bank rate to 3.00 percent, which would be the biggest hike since 1989.

The BoE is also scheduled to release its monetary policy report that provides the monetary policy committee’s economic analysis and inflation projections.

U.K. S&P/CIPS final services Purchasing Managers’ survey results are due. The services PMI is seen at 47.5 in October, unchanged from the flash estimate, and down from 50.0 in September.

Eurostat is slated to issue euro area unemployment data. The jobless rate is forecast to remain at 6.6 percent in September.

Across the Atlantic, trading may be impacted by reaction to the reports on weekly jobless claims, service sector activity, labor productivity and factory orders.

A private survey showed earlier today that China’s service sector registered a sustained slowdown in activity as efforts to curb the spread of Covid-19 continued to disrupt business operations in October.

The Caixin services Purchasing Managers’ Index fell to 48.4 in October from 49.3 in the previous month.

U.S. stocks fell sharply overnight after observers characterized Powell’s comments at the press conference as more hawkish than expected.

The Dow lost 1.6 percent, the tech-heavy Nasdaq Composite plummeted 3.4 percent and the S&P 500 slumped 2.5 percent.

European stocks dropped for the first time in three days on Wednesday ahead of the Fed decision.

The pan European STOXX 600 slipped 0.3 percent. France’s CAC 40 gave up 0.8 percent while the German DAX and the U.K.’s FTSE 100 both shed around 0.6 percent.

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