European markets set to inch higher as investors digest Fed direction

LONDON — European markets are set for a higher open on Thursday as global stocks take heart from slightly less hawkish messaging from the U.S. Federal Reserve.

Britain’s FTSE 100 is seen around 17 points higher at 7,365, Germany’s DAX is set to climb by around 45 points to 13,211 and France’s CAC 40 is expected to add around 30 points to 6,288.

The Fed on Wednesday implemented a widely expected second consecutive 75 basis point interest rate hike, as it seeks to reel in runaway inflation without tipping the slowing economy into recession.

Chairman Jerome Powell maintained a hawkish tone on curtailing inflation in a subsequent news conference, but the central bank dropped guidance on the scale of the next rate hike and acknowledged that “at some point” it will be appropriate to slow the pace of increases.

Shares in Asia-Pacific were mostly higher overnight, taking their lead from a broad-based rally on Wall Street following the decision, which took the Fed funds rate to its highest level since December 2018.

Following the rate hike from the Fed, DoubleLine Capital’s CEO Jeffrey Gundlach told CNBC’s “Closing Bell Overtime” he believes the central bank is no longer behind the curve on inflation and Powell has regained credibility.

U.S. stock futures were slightly lower in early premarket trade on Thursday, with shares of Meta Platforms dipping after disappointing quarterly results.

Earnings continue to drive individual share price movement in Europe, with a slew of major companies reporting before the bell on Thursday. They include Barclays, Shell, EDF, TotalEnergies, Stellantis, Leonardo, Prada, Diageo and BT.

On the data front, a key euro zone business climate and economic sentiment survey for July is due on Thursday, along with preliminary German inflation figures.

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(With Inputs from cnbc)

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