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Title: European Stock Futures Higher on Tempered Fed Hike Expectations

May 05, 2022 02:01AM ET

By: AnalysisWatch

European stock markets are expected to open higher on Thursday following strong gains on Wall Street after the Federal Reserve raised interest rates by 50 basis points but tempered expectations of even bigger increases in the future.

At 2am, DAX futures in Germany were trading 0.4% higher, CAC 40 futures in France were up 2.3%, and FTSE 100 futures in the UK were up 1.1%.

The Federal Reserve of the United States raised its benchmark interest rate by half a point on Wednesday and announced that it will begin reducing its $9 trillion bond portfolio in June to combat inflation, which is currently at its highest level in forty years.

It was the biggest rate hike in two decades but was widely expected, and Fed Chairman Jerome Powell also said that a bigger increase was not being considered. He allayed fears among some investors that the central bank would raise rates by 75 basis points at upcoming meetings, which could plunge the world's largest economy into recession.

In response to his remarks, the Dow Jones Industrial Average rose nearly 1,000 points, or 2.8%, the broad-based S&P 500 index rose 3%, and the tech-heavy Nasdaq Composite rose 3.2%.

Back in Europe, attention is turning to the Bank of England, which is also expected to raise its main interest rate by 25 basis points, the fourth rate hike in a row, in order to curb rising consumer prices.

The next important day in Europe is Thursday, when quarterly corporate earnings will be released.

Anheuser-Busch InBev, the world's biggest beer maker, posted a better-than-expected profit in the first quarter as consumers accepted higher prices.

Airlines Air France and KLM pointed to a successful summer season boosted by a rebound in ticket sales, but Germany's flagship airline, Deutsche Lufthansa, reported a wider-than-expected quarterly loss on Thursday as rising fuel costs erased a surge in revenue from growing travel demand.

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