News Column

European Stocks Seen Rising Before Fed Decision

June 17, 2014



VIENNA (Alliance News) - Stock futures point to a higher opening on Wednesday as investors look ahead to the Federal Reserve's monetary policy announcement later in the day, with economists expecting the central bank to announce another USD10 billion reduction in the pace of asset purchases. Traders will focus more on the language of the accompanying statement and the central bank's latest forecasts for growth, inflation and interest rates after inflation data released overnight sparked speculation interest rates could rise sooner than expected.

The Bank of England will release the minutes of its June meeting where the central bank held interest rates at 0.5% and asset purchases at GBP375 billion. Britain's inflation rate slowed to its lowest level in almost five years in May, data released yesterday showed, giving the Bank of England some flexibility over the timing of the first rise in interest rates.

Eurozone construction output data for April and a report on Swiss ZEW economic sentiment are also slated for release later in the European session.

In Iraq, Prime Minister Nuri al-Maliki dismissed several senior security force officers as the Sunni militants led by the forces of the Islamic State in Iraq and the Levant took control of various parts of central city of Baquba, just 60 kilometers from Baghdad. A United Nations panel warned that Iraq is in danger of disintegrating in the face of the assault by Sunni Arab militants.

Asian stocks are trading mixed, with Japan's Nikkei Index rising a percent on a weaker yen while the markets elsewhere are swinging between gains and losses ahead the Fed's policy statement.

In domestic corporate news, Swiss drug maker Novartis AG said it expects the new company, which emerged after a portfolio review, to be more profitable.

European stocks inched higher on Tuesday, although gains were capped ahead of the Fed policy meeting and amid concerns over the escalating conflict in Iraq. The benchmark indexes in the UK, Germany and France rose between 0.2% and 0.6%. Automakers gained ground as data showed European car sales rose for the ninth consecutive month in May.

US stocks rose for a third session overnight as investors digested mixed economic data and looked ahead to the FOMC meeting. Housing starts and building permits fell more than expected in May, while consumer prices gained traction, recording their largest increase in more than a year in May reflecting higher household costs, separate reports showed. The Dow and the S&P 500 rose about 0.2% each, while the tech-heavy Nasdaq advanced 0.4%.



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Source: Alliance News


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