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  • Writer's pictureanalysiswatch

Title: European Stock Futures Edge Higher; ECB Meeting Looms Large

Sep 08, 2022 01:58AM ET

By: AnalysisWatch

European stock markets are expected to open higher on Thursday, helped by a positive finish on Wall Street that will lift global sentiment, but gains are likely to be uncertain ahead of the European Central Bank's last policy-setting meeting.

At 02:00 GMT, the DAX futures contract in Germany was trading 0.5% higher, the CAC 40 futures contract in France was up 0.3%, and the FTSE 100 futures contract in the UK was up 0.2%.

On Thursday, the market's main focus will be on the European Central Bank, which is widely expected to raise interest rates again in a bid to combat inflation that is fast approaching double digits.

Although the most likely move is a 50 basis point hike to match July's increase, with record inflation and Russian gas supply constraints pushing energy prices even higher, there is a strong case for the ECB to be even more aggressive and implement its largest rate hike to date of 75 basis points.

Still, the central bank faces a balancing act as economic activity in the Eurozone is already slowing significantly due to the ongoing energy crisis, pointing to a recession later in the year.

European stock markets will see a positive handover from Wall Street on Thursday as the blue-chip Dow Jones Industrial Average closed Wednesday's session more than 400 points, or 1.4%, higher, snapping seven consecutive sessions of declines.

Fed Chairman Jerome Powell is scheduled to take part in a panel discussion at a virtual Cato Institute meeting later on Thursday, and investors will be looking for clues about the central bank's thinking ahead of its next policy meeting later this month.

In corporate news, Melrose Industries will be in focus after the Financial Times reported that the aircraft and auto parts supplier plans to spin off its GKN automotive unit as a new UK-listed company, splitting one of Britain's oldest engineering businesses.

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