EU Shares Turn Higher With Fed Rate Path And Upcoming EU PMI Data
During the Tuesday trading session, EU shares were trading higher as investors were mixed about the next path for the US Federal Reserve. In addition, the market participants are also awaiting fresh economic data from the EU region.
A closer look at the European region reveals that the Stoxx 600 was up by 0.04% while the Dax from Germany was up by 0.09%. Similarly, the CAC 40 from France was also up by 0.19%. In the UK, the leading index, 'FTSE 100', was down by 0.47%, making it one of the outliers among its peers.
Growing Optimism For A Lose Monetary Policy By Fed
In the USA, we have already seen the US equities stage an impressive rally in hopes that the Fed will slow down its policy of monetary tightening. In fact, many Fed officials are now backing a rate hike of 25 basis points only, which is much small than the previous rate hikes.
However, there are still growing concerns that inflation in the USA might take a long time to reach the 2% target set by Fed.
In the Asian region, the stocks are enjoying a good upward movement due to the opening of China. But the trading volume with China is still thin as the Chinese markets are closed for the Lunar New Year.
Looking ahead, it will be more about whether the European Union adopts a more stock-friendly approach or the US! And all of it will depend on how the inflation situation turns out in both of these regions. In the USA, there are hopes that inflation is slowing down, and so is the case with the EU region.
But it would be too soon to call an end to inflation since it is still at several years' high! But when compared with 2022, there's still hope that the year 2023 will be a better year since the rate hike cycle will eventually slow down and become more spaced out.