European stocks are likely to open higher on Thursday as investors react to a dovish speech by Fed Chair Jerome Powell at the Brookings Institution in Washington.
Asian markets followed Wall Street higher, but overall gains were relatively modest on China growth concerns.
China’s manufacturing sector continued to contract in November due to the sustained reductions in output and sales, a closely watched survey showed earlier today.
The Caixin manufacturing Purchasing Managers’ Index rose moderately to 49.4 in November from 49.2 in October, data published by S&P Global revealed.
China’s vice-premier signaled a shift in the country’s COVID stance, with several regions including Shanghai beginning to lift lockdowns despite continuing high case numbers.
Meanwhile, Nato allies are concerned about China’s coercive policies, including its cooperation with Russia, U.S. secretary of state Antony Blinken told a news conference on Wednesday after a two-day meeting of foreign ministers from the defense alliance.
The dollar tumbled to a three-month low versus the Japanese yen on improved risk sentiment while gold traded at a two-week high on hopes for smaller U.S. rate hikes.
Oil prices fell slightly in Asian trade after having climbed about 3 percent on Wednesday.
A final PMI reading on S&P Global’s factory sector for Eurozone is due later in the session. Across the Atlantic, trading may be impacted by another batch of U.S. economic data, including reports on weekly jobless claims, personal income and spending and manufacturing activity.
U.S. stocks rallied overnight and recorded their first back-to-back monthly gains since 2021 after Powell indicated the central bank might moderate the pace of rate increases as soon as December.
At the same time, Powell noted that restoring price stability will require holding policy at a restrictive level for some time until signs of progress emerge on inflation.
Economic data painted a mixed picture, with private payrolls growth slowing in November and third-quarter GDP growth revised up to 2.9 percent from 2.6 percent.
The Dow jumped 2.2 percent to hit a new seven-month closing high, while the tech-heavy Nasdaq Composite and the S&P 500 surged 4.4 percent and 3.1 percent, respectively to reach their best closing levels in over two months.
European stocks snapped a three-day losing streak on Wednesday as data showed eurozone inflation slowed more than expected in November.
The pan European STOXX 600 gained 0.6 percent. The German DAX edged up 0.3 percent, France’s CAC 40 index climbed 1 percent and the U.K.’s FTSE 100 added 0.8 percent.