European Shares Set For Steady Open On Hopes For Rate Cuts

(RTTNews) - European stocks may open on a firm note Friday, with U.S. rate cuts and optimism over China's economic recovery likely to underpin investor sentiment.

The dollar fell and bond yields dipped as fresh signs of an easing U.S. labor market helped keep hopes of Fed interest rate cuts alive.

There is also optimism around Chinese economic recovery after April trade data beat estimates and two key cities of Hangzhou and Xian scrapped all restrictions on home purchases to lure buyers.

Asian markets were broadly higher due to shifting expectations around interest rates in the U.S. and elsewhere globally after Sweden's central bank lowered its key interest rate for the first time in more than eight years and Bank of England (BoE) Governor Andrew Bailey hinted at potential future rate cuts.

Gold held above $2,350 per ounce ahead of U.S. consumer and producer price inflation data due next week that are pivotal for the Federal Reserve's higher-for-longer rate strategy.

Federal-funds futures currently show traders expect the Fed to start lowering its benchmark interest rate in November though there remains a chance of a cut in September.

Oil prices rose in Asian trading and were on track for a weekly gain after data showed declining U.S. crude inventories and robust Chinese imports.

In the Middle East, Israel's attacks on Rafah continue to expand despite U.S. President Biden threatening to withhold weapons shipments.

Egypt has said Hamas and Israel must show "flexibility" if they are to strike a deal for a ceasefire.

Trading later in the day may be impacted by reaction to a report on U.S. consumer sentiment for May, which includes readings on inflation expectations. Remarks by several Fed officials may also attract attention along with the latest earnings news.

Overnight, U.S. stocks posted strong gains as data showed the number of Americans filing new claims for unemployment benefits rose last week to the highest level in more than eight months, adding to expectations for rate cuts by the Federal Reserve in the coming months.

The Dow climbed 0.9 percent to extend its winning streak to a seventh straight session and reach over one-month closing high.

The S&P 500 gained half a percent and the tech-heavy Nasdaq Composite inched up 0.3 percent.

European stocks extended gains for a fifth consecutive session on Thursday after the Bank of England held interest rates steady but signaled it will cut rates this summer if inflation stays low.

The pan European STOXX 600 rose 0.2 percent. The German DAX rallied 1 percent, France's CAC 40 rose 0.7 percent and the U.K.'s FTSE 100 edged up 0.3 percent.