Fresh economic data out of the Eurozone and the United States would set the tone for the shared currency
Wall Street equities rallied overnight after the Fed announced a 0.75% rate hike, as expected. At that, the central bank sounded less hawkish and noted that “at some point” it would be appropriate to slow down rate hikes. Against this backdrop, the Dow Jones Industrial Average jumped 1.37%, the S&P 500 gained 2.62% and the Nasdaq Composite climbed 4.06%, with tech shares leading gains despite mixed quarterly results from Alphabet and Microsoft. However, some tech stocks slipped after hours after poor quarterly results from Meta Platforms. Now, investors’ focus shifts to the US GDP report due later today.
Asian stocks advanced on Thursday as investors digested Fed’s more measured tone on its tightening cycle, with market players cheering signs of a possible slowdown in the pace of US interest rate hikes. Japan’s Nikkei 225 gained 0.36%, China’s Shanghai Composite was up 0.21%, and Hong Kong’s Hang Seng index bucked the trend to shed 0.21% as the benchmark gave up early gains. In part, the early buying pressure eased amid a report that China is to conduct military drills in the South China Sea on Friday and Saturday.
Following suit, European stocks opened in positive territory today, with the pan-European Stoxx 600 adding 0.5% in early deals. In individual stocks, shares of Barclays fell nearly 1% since the opening bell in a knee-jerk reaction to a 48% slump in second-quarter profit amid higher costs and litigation expenses. In general, risk sentiment is getting more tentative today with S&P 500 futures down 0.2% and Nasdaq futures down 0.4%, suggesting the rally is unlikely to continue ahead of the weekend.
Meanwhile, the dollar stays on the defensive after yesterday’s sell-off in the aftermath of the Fed’s less hawkish meeting. However, the USD index still holds above the 106.00 figure, looking steadier in early European deals as risk-on tone abates gradually. As such, EURUSD failed to hold above the 1.0200 mark and turned slightly negative on the day in recent trading. In the near term, fresh economic data out of the Eurozone and the United States would set the tone for the shared currency. US PCE report could put the buck back under pressure if the figures reflect a slowdown in inflation.