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Investing.com – European stock markets are set to open sharply lower Thursday, weighed by the gloomy assessment of the economic outlook by the U.S. Federal Reserve.
At 2:00 AM ET (0600 GMT), the DAX futures contract in Germany traded 1.6% lower. France’s CAC 40 futures were down 2%, while the FTSE 100 futures contract in the U.K. fell 1.9%.
The U.S. central bank kept its interest rates on hold as it concluded its latest two-day policy meeting late Wednesday, but painted a pretty depressing picture with its first projections on the world’s largest economy since the coronavirus outbreak.
The Fed quarterly predictions pointed to a long road towards economic recovery from the Covid-19 virus, estimating that U.S. GDP would contract by 6.5% in 2020 and unemployment would fall to 9.3% in the final three months of the year from May’s 13.3%.
“Overall, the Fed thinks the road to recovery has begun, but it is a long run. And it is not V-shaped one,” said analysts at Nordea, in a research note to clients.
In Europe, the main event will be the Eurogroup meeting, where the finance ministers are expected to discuss the EU recovery fund.
“Given the differences between the EU commission and e.g. the Netherlands and Austria, the proposal for the recovery fund needs some work before it can be passed in the various parliaments,” said Danske Bank, in a research note.
In corporate news,Just Eat Takeaway (LON:JETJ) will be in focus after the surprise announcement late Wednesday that it is set to merge with Grubhub (NYSE:GRUB), creating a trans-Atlantic food-delivery giant. The all-stock deal is expected to close in the first quarter of 2021.
Nokia (HE:NOKIA) said Thursday that it has appointed Marco Wiren as Chief Financial Officer, replacing Kristian Pullola. He will join Nokia on Sept. 1, leaving his current role as president of Wartsila Energy and executive vice president of Wartsila Group.
Oil prices slumped Thursday, weighed by the Fed’s grim assessment of the economic outlook as well as increased fears of a supply glut.
U.S. crude stockpiles rose by 5.72 million barrels last week to 538.1 million barrels, the Energy Information Administration forecast late Wednesday, against expectations of a 1.738 million-barrel draw.
EIA’s call followed the American Petroleum Institute prediction of a whopping 8.4 million-barrel build on Tuesday, increasing fears of an oversupply.
At 2:00 AM ET, Crude Oil WTI Futures traded 4.1% lower at $37.99 a barrel. The international benchmark Brent contract fell 3.5% to $40.27.
Elsewhere, gold futures rose 1% to $1,738.10/oz, while EUR/USD traded at 1.1346, down 0.2%.
