By Peter Nurse
Investing.com - European stock markets are seen opening lower Thursday, as investors react with disappointment to the U.S. Federal Reserve’s decision not to add additional stimulus at its latest meeting.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.7% lower, CAC 40 futures in France dropped 0.6%, while the FTSE 100 futures contract in the U.K. fell 1.2%.
The Federal Reserve kept rates unchanged Wednesday, and signalled that interest rates would stay close to zero at least through 2023, to support the economy's ongoing recovery.
However, in its first meeting since adopting a more tolerant stance on inflation, the U.S. central bank did not offer further specifics on the central bank’s approach to monthly bond purchases, disappointing some investors hoping for further largesse.
“Nonetheless, the Fed remains wary, suggesting that the pandemic will ‘continue to weigh on economic activity, employment and inflation in the near-term, and pose considerable risks to the economic outlook over the medium term’,” wrote analysts at ING, in a research note.
Earlier Thursday, the Bank of Japan kept its key interest rate at -0.1% and left its asset purchases unchanged, while stating that the economy has started to pick up.
The focus now shifts to the Bank of England, which is expected to announce its latest policy decision at 7 AM ET (1100 GMT).
“The BOE’s not done,” said James Rossiter, an economist at TD Securities, reported by Bloomberg. “More quantitative easing is necessary and this meeting does provide a bit of an opportunity to shift things in that direction. The big cliff coming is on the employment side.”
In corporate news, EssilorLuxottica (PA:ESLX) is likely to be in the spotlight after the Franco-Italian eyewear manufacturer announced plans to join forces with Facebook (NASDAQ:FB) for the development of smart glasses. The first product is set to carry the Ray-Ban brand, and is expected to launch next year.
Oil prices fell Thursday, rebalancing after recent strong gains as producers in the Gulf of Mexico took steps to resume output in the wake of Hurricane Sally.
Additionally, the U.S. Energy Information Administration late Wednesday announced a draw of 4.389 million barrels for last week, a substantial figure but the market had already moved on the 9.517 million-barrel draw recorded by the American Petroleum Institute the day before.
A panel of the Organization of the Petroleum Exporting Countries and its allies, together known as OPEC+, meets on Thursday to review the market, but is not expected to announce any market-moving measures.
U.S. crude futures traded 1.5% lower at $39.55 a barrel, while the international benchmark Brent contract fell 1.3% to $41.67. Both benchmarks saw gains of close to 5% during the previous session.
Elsewhere, gold futures fell 1.2% to $1,946.20/oz, while EUR/USD traded 0.4% lower at 1.1768.