Investing.com – European stock markets fell on Thursday as the hawkish Federal Reserve expressed concerns about further monetary easing.
At 03:05 ET (0705 GMT), Germany was trading 0.3% lower, France was down 0.2% and the UK was down 0.2%.
Hawkish Fed weighs in
The US Federal Reserve was widely expected to remain unchanged on Wednesday, but in a hawkish surprise, central bank officials now believe smaller rate cuts will be needed this year as inflation is expected to be higher than previously expected.
Fed members now see the benchmark rate falling to 5.1% this year from the current range of 5.25% to 5.5%, implying just one rate cut in 2024, down from a previous estimate in March of three reductions.
Additionally, four FOMC members have called for no rate cuts this year, a much more aggressive stance than expected.
Interest rates were cut last Thursday for the first time since 2019, but stopped short of making any promises to follow through, creating some uncertainty about what will follow.
More inflation data in focus
This means investors will be keeping a close eye on upcoming economic data to get an idea of future interest rate movements.
Wednesday’s favorable environment will likely help limit losses in European stocks on Thursday, but data released earlier on Thursday showed May growth was 3.6% year-on-year, a jump from 3.3% in the previous month .
In contrast, it fell 0.7% in May compared to the same month last year.
US data later on Thursday will attract a lot of attention, and the end of the Fed meeting means politicians will be back at the floor talking, starting with the New York Fed president at the Economic Club of New York.
St James’s Place hires new finance director
Shares in St James’s Place fell 1.4% after the British asset manager said it had hired UBS chief executive Caroline Waddington as its chief financial officer, replacing Craig Gentle, who plans to retire.
She will join St James’s Place in the second half of the year, after which Gentle, who has served as finance director since January 2018, will step down as director.
Oil falls on unexpected rise in US stock indices
Crude oil prices fell on Thursday following a surprise increase in inventories, while the IEA also cut its forecast for oil demand growth to 2024.
By 03:05 ET, U.S. crude oil (WTI) futures were trading 0.4% lower at $78.19 a barrel, with the contract down 0.4% at $82.27 a barrel.
Government data released Wednesday showed U.S. oil inventories rose unexpectedly by 3.7 million barrels in the first week of June, versus expectations of a 1.2 million barrel decline.
Huge inventories of distillates and gasoline have also raised concerns that fuel demand is not rising with the summer season as expected.
In addition, the International Energy Agency lowered its forecast for demand growth in 2024 by 100,000 barrels per day to 960,000 barrels per day.