European Shares Seen Opening Up As Traders Shrug Off Fed Hike

(RTTNews) - European stocks are seen opening higher on Thursday after the U.S. Federal Reserve delivered its first interest-rate hike since July 2023 and suggested rates may need to go still higher to get inflation under control.

According to forecasts published after the meeting, Fed officials expect the federal funds rate to end this year at 4.1 percent, up from the current range of 3.75 percent to 4 percent following the latest 25-bps increase.

According to data from CME Group, investors currently bet on a 38 percent probability the Fed could hike the federal funds rate to a range of 4.25 percent to 4.40 percent by the end of the year.

At his press conference, Fed Chair Kevin Warsh struck a decidedly hawkish tone, saying that inflation is too high and has been too long.

Pointing to solid hiring trends, corporate profits and investments by businesses, Warsh said the economy has strengthened since policymakers last met in June.

As focus shifts to broader and more persistent inflation pressures, investor attention is now heavily focused on upcoming U.S. inflation and labor-market data ahead of the October meeting.

U.S. stock futures ticked higher after the U.S. House of Representatives passed legislation pushing AI data centers to cover new power and transmission costs.

Asian markets were broadly higher, though Chinese and Hong Kong stocks fell ahead of high-level U.S.-China talks scheduled for this weekend. U.S. Treasury Secretary said the United States is open to discussing shared risks with China in upcoming AI talks.

In another significant development, the U.S. House has passed a sanctions bill that could allow President Trump to impose up to 100 percent tariffs on major buyers of Russian oil, including India and China.

The U.S. dollar index held on to Wednesday's gains while Treasuries pared losses, with the yield on two-year U.S. note falling two basis points to 4.72 percent after climbing to the highest since 2024.

Brent crude futures slipped below $106 a barrel, extending losses from the previous session after reports suggested that U.S. officials held a confidential meeting with Yemen's Houthis in Oman amid rising Red Sea tensions, spurring new hopes over an easing in Middle East tensions.

Both Brent and WTI contracts fell about $3 a barrel on Wednesday after reports emerged that Saudi Arabia is offering more crude oil to Asian refiners through ship-to-ship transfer off Oman's Sohar port.

Gold surged 0.7 percent to 4,292 an ounce in Asian trade after touching a six-week low earlier.

U.S. stocks fell overnight, with all three major indexes closing lower for the seventh time in the past eight sessions, after the Fed's monetary policy decision and hawkish Warsh comments.

The Dow fell 1.2 percent to hit a three-month closing low and the S&P 500 declined half a percent to reach its lowest closing level in well over a month, while the tech-heavy Nasdaq Composite finished marginally lower.

European stocks recovered from three-month lows on Wednesday as a rally in oil prices paused following reports that Saudi Arabia was offering additional crude cargoes via Oman.

The pan-European STOXX 600 gained half a percent. The German DAX rose half a percent, France's CAC 40 added 0.6 percent and the U.K.'s FTSE 100 inched up 0.3 percent.