European stock futures mixed; Bank of England in focus after Fed hike

By Peter Nurse 

Investing.com - European stock markets are expected to open in a mixed fashion Thursday as investors digest the latest interest rate increase by the U.S. Federal Reserve ahead of a policy-setting meeting by the Bank of England.

At 03:00 ET (07:00 GMT), the DAX futures contract in Germany traded 0.3% lower, the FTSE 100 futures contract in the U.K. fell 0.2%, while CAC 40 futures in France climbed 0.6%.

European equities are set Thursday to take their lead from the negative close on Wall Street overnight, with the benchmark Dow Jones Industrial Average dropping over 500 points, or 1.6%.

This Fed raised its benchmark interest rate by 25 basis points as widely expected, forecasting at least one more hike this year, and saying it has no intention of cutting interest rates this year.

The central bank also trimmed its outlook for annual GDP, with the banking turmoil likely to have an impact on growth.

However, it was comments from Treasury Secretary Janet Yellen that caused the most damage, as she said the government "is not considering insuring all uninsured bank deposits". 

Speculation about such a move had boosted confidence in the sector earlier in the week.

Back in Europe, the Bank of England meets later in the session, and is expected to follow the Fed’s lead with a 25-basis-point hike, especially after U.K. inflation unexpectedly rose back above 10% in February, data showed on Wednesday.

EU leaders are also set to meet in Brussels for a two-day summit, looking for ways to compete with the United States and China on a long-term basis.

In the corporate sector, the focus will remain on the banking sector after the sharp losses on Wall Street overnight. That said, the sector has withstood the turmoil reasonably well in the wake of the European Central Bank’s 50 basis points hike last week and the forced merger of UBS (SIX:UBSG) and Credit Suisse (SIX:CSGN).

Oil prices fell Thursday, snapping a three-day advance, after the Fed hiked interest rates while U.S. crude oil stocks grew again, rising for 12 out of the last 13 weeks.

Data from the Energy Information Administration showed that U.S. crude oil inventories grew by just over 1 million barrels, climbing to the highest level since May 2021.

By 03:00 ET, U.S. crude futures traded 0.8% lower at $70.35 a barrel, while the Brent contract dropped 0.6% to $76.22. 

Both crude benchmarks settled on Wednesday at their highest close since March 14 after the dollar slid to a six-week low.

Additionally, gold futures rose 1.6% to $1,981.50/oz, while EUR/USD traded 0.6% higher at 1.0917.