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  • Writer's pictureanalysiswatch

Title: European Stock Futures Lower; Fed Minutes Point to Aggressive Tightening

Apr 07, 2022 01:56AM ET

By: AnalysisWatch

European stock markets are expected to open lower on Thursday, extending sharp losses from the previous session, as investors are cautious after U.S. Federal Reserve policymakers hinted at the need to tighten monetary policy to fight inflation.

At 2:00 AM ET, the DAX futures contract in Germany was trading 0.2% lower, the CAC 40 futures contract in France was down 0.4%, and the FTSE 100 futures contract in the UK was down 0.1%.

The Fed signaled in Wednesday's meeting minutes that it is prepared to act faster to tighten the reins on the economy and curb rampant inflation, including reducing its bond balance sheet faster than initially expected.

The news weighed on Wall Street's major indices, with the tech-heavy Nasdaq Composite being the hardest hit, falling 2.2% on Wednesday. Europe's major indices also suffered, with both the DAX and CAC 40 closing around 2% lower.

Investors fear that likely massive interest rate hikes in the future-with "many" policymakers now poised to raise rates in 50 basis point increments at upcoming meetings-will severely limit growth in the world's largest economy and main global engine.

Earlier this week, Deutsche Bank became the first major Wall Street bank to predict a U.S. recession by the summer of 2023.

Investors also continued to monitor developments in the war in Ukraine after the United States announced new measures on Wednesday to punish Moscow, including sanctions on President Vladimir Putin's two adult daughters and Russia's Sberbank and a ban on Americans investing in Russia.

In his daily video message early Thursday morning, Ukrainian President Volodymyr Zelensky called on the West to take greater action, seeking sanctions that would be economically destructive enough for Russia to end the war.

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