European Stocks Seen Just Higher; ECB Minutes in Focus

This post was originally published on this site – European stock markets are seen opening marginally higher Thursday, helped by strong gains on Wall street overnight after President Donald Trump revived hopes of a fiscal stimulus package in the U.S.

At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.3% higher, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.1%. 

The Dow Jones Industrial Average closed 1.9%, or 530 points, higher Wednesday, to hit a new one-month high, while the S&P 500 index climbed 1.7%, and the NASDAQ Composite index added 1.9%. These indexes jumped on renewed hopes for stimulus after Trump rowed back on comments from just a day earlier and said he was in favor of targeted coronavirus aid.

This should help the overall tone early Thursday, but there will still be an element of caution with the ECB scheduled to release the minutes from its last rate-setting meeting later in the session.

Globally, risk assets have rallied since mid-March on a flood of central bank and government support for economies reeling from coronavirus-induced lockdowns world over. 

A second-wave of coronavirus infections, hitting Europe in particular, has resulted in the imposition of more restrictions, prompting fears of a further economic slowdown. ECB President Christine Lagarde said earlier this week that the ‘second leg’ of what policymakers had hoped would be a V-shaped recovery looked ‘shaky’, a comment that many took as preparing the ground for an increase to its main bond-buying program at its December meeting.

With the euro zone’s 750 billion euro recovery fund not expected to yield results until next year, the pressure on the ECB to keep reflating the economy is not going away any time soon.

“Euro-area core inflation has surprised to the downside lately and hit a record-low in September,” said analysts at Nordea, in a research note. “The ECB’s staff forecast horizon will cover 2023 for the first time in December, and a staff forecast showing inflation still clearly below target in 2023 will be hard to ignore.”

Later in the session, attention will turn to the weekly U.S. employment data, which will likely show the recovery in the world’s largest economy losing steam, especially after Friday’s disappointing nonfarm payrolls release.

Economists predict a decline in jobless claims, however, continued claims are expected to remain firmly above 11 million.

Oil prices edged higher Thursday as the approach of Hurricane Delta caused production in many of the rigs in the Gulf of Mexico to be halted. Gains are small though, as fuel demand concerns persist with crude oil supplies rising.

The Energy Information Administration data on Wednesday showed crude inventories rose by 501,000 barrels last week, a little larger than expected. Earlier in the week, the private body, the American Petroleum Institute, reported a build in U.S. oil stocks of 951,000 barrels last week.

U.S. crude futures traded 0.1% higher at $40.02 a barrel, while the international benchmark Brent contract rose 0.3% to $42.12. Both contracts fell over 1.5% on Wednesday.

Elsewhere, gold futures rose 0.1% to $1,891.80/oz, while EUR/USD traded 0.1% higher at 1.1774.