European stocks may open higher on Friday, with banks likely to benefit from a rise in longer-dated Treasury yields after the U.S. Federal Reserve announced a landmark policy shift to allow higher inflation and welcome strong labor markets.
Underlying sentiment may also remain supported somewhat after Walmart said it was joining Microsoft in a bid for social media company TikTok’s U.S. assets.
Asian markets remain broadly higher in cautious trade after U.S. House of Representatives Speaker Nancy Pelosi said Democrats and the White House are at a “tragic impasse” on coronavirus relief.
The U.S. dollar hit a two-week high against the yen amid rising U.S. bond yields while gold recovered some ground after having declined over 1 percent in the previous session. Oil held steady as Hurricane Laura roared through Louisiana and Texas without causing any apparent major damage.
Economic confidence numbers from euro area will be out later in the session, headlining a busy day for the European economic news. Across the Atlantic, trading may be impacted by reaction to another batch of economic data, including reports on personal income and spending, consumer sentiment and Chicago-area business activity.
U.S. stocks fluctuated before closing mostly higher overnight as Fed Chair Jerome Powell announced a major policy shift to “average inflation targeting”, meaning the Fed is willing to allow inflation to run higher than the standard 2 percent target before hiking interest rates.
The Fed also adjusted its view of full employment to allow labor-market gains to reach more workers.
The S&P 500 edged up 0.2 percent to a fresh record closing high and the Dow Jones Industrial Average rose 0.6 percent to end at its best closing level in over six months, while the tech-heavy Nasdaq Composite shed 0.3 percent.
European markets drifted lower on Thursday as concerns over rising U.S.-China tensions and lingering coronavirus worries overshadowed the aggressive growth strategy from the Federal Reserve.
The pan European Stoxx 600 declined 0.6 percent. The German DAX dropped 0.7 percent, France’s CAC 40 index slid 0.6 percent and the U.K.’s FTSE 100 gave up 0.8 percent.
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