European equities are expected to open modestly on Thursday as investors continue to weigh the inflation outlook and escalating tensions in West Asia. Market participants are monitoring a range of macro‑economic indicators and geopolitical developments that could influence risk sentiment.
After U.S. consumer‑price data surprised to the upside, attention has shifted to forthcoming U.S. producer‑price inflation and retail‑sales reports, as well as speeches from Federal Reserve officials—most notably Chairman Kevin Warsh later in the day. The Fed’s policy trajectory remains the primary driver of market dynamics.
San Francisco Federal Reserve President Mary Daly indicated on Wednesday that the central bank may need to raise short‑term rates further to contain inflation, though she saw no urgency for action at the October 27‑28 meeting. Market pricing now reflects a roughly 35 % probability of a rate hike at the next policy meeting, up from about 22 % a day earlier, according to the CME FedWatch tool.
In Asia, most benchmarks finished lower, with South Korea’s Kospi plunging nearly 8 % and Japan’s Nikkei dropping more than 4 % as tech‑stock valuations came under pressure amid doubts about the sustainability of AI‑driven growth. Investors are awaiting third‑quarter earnings and guidance from AI chip giant TSMC for further clues on the sector’s health.
Currency and commodity markets showed mixed reactions. The U.S. dollar retreated from an 18‑month peak, while gold rose about 1 % to $4,145 an ounce after touching a one‑week low. Brent crude futures slipped nearly 2 % toward $104 a barrel, reflecting profit‑taking after recent gains, though supply worries persisted following reported strikes on commercial vessels in the Strait of Hormuz. The Trump administration is reportedly considering easing sanctions on shadow‑fleet vessels to curb soaring freight rates, while Houthi militants have vowed to continue targeting Saudi airports and oil facilities, including an attack on Aramco’s headquarters.
Geopolitical friction extended to Eastern Europe, with Russia accusing Ukraine of striking two oil refineries, including the 400,000‑bbl/day Ryazan facility. Russian Deputy Prime Minister Alexander Novak noted that there was “no indication that the Ukrainian side is moving towards an energy ceasefire.”
U.S. equities suffered their worst decline since July overnight, pressured by rising bond yields after hotter‑than‑expected inflation data reinforced expectations for an additional Fed rate increase this year. The 10‑year Treasury yield briefly topped 5.32 % before easing, while the CPI reading showed a year‑over‑year rise of 3.7 % in September (matching expectations) and a core CPI increase of 2.6 % (slightly above the 2.5 % forecast). The S&P 500 fell 1.1 % for its fifth decline in six days, the Nasdaq dropped 1.9 % amid AI‑funding concerns, and the Dow edged down 0.1 %.
In Europe, stocks closed higher on Wednesday, buoyed by strong earnings from ASML, which lifted technology shares. The pan‑European STOXX 600 advanced 0.4 %, the German DAX edged up 0.2 %, France’s CAC 40 gained 0.6 %, and the U.K.’s FTSE 100 rose 0.7 %.
