European stocks may follow Wall Street and Asia higher on Thursday, with gains likely to be underpinned by a drop in bond yields after Fed Chair Janet Yellen sounded cautious on inflation and noted the federal-funds rate don’t have to rise all that much further to get to a neutral policy stance.
The dollar retreated against a basket of currencies following the dovish comments from Yellen in her semiannual testimony to Congress.
US crude futures held stable after climbing 1% overnight on government data showing a bigger-than-expected drop in crude stocks, while gold traded flat after three days of gains amid political uncertainty in the US.
President Donald Trump said on Wednesday he did not fault his embattled son Donald Trump Jr. for holding a meeting with a Russian lawyer during the 2016 presidential election campaign.
Asian stocks are broadly higher as Yellen’s comments about gradual policy tightening soothed fears of a central bank moving too fast.
China’s exports increased at a faster-than-expected pace in June, official data showed, further aiding sentiment.
In dollar terms, exports grew 11.3% year-over-year in June, faster than the 8.9% rise economists had forecast.
Similarly, imports surged 17.2% from a year ago, bigger than the expected growth of 14.5%.
Elsewhere, low inflation enabled the Bank of Korea to keep the nation’s benchmark interest rate unchanged at the record low 1.25% for the 11th straight month.
Closer to home, the average asking price for a house in the UK dropped precipitously in June, the Royal Institution of Chartered Surveyors said with an index score of +7, well shy of forecasts for a +15 reading and down sharply from +17 in May.
“High-end prime properties may be seeing prices slipping back but, for good or ill, prices are continuing to move higher in many other segments of the market,” said RICS Chief Economist Simon Rubinsohn.
Final consumer price inflation data from Germany and France, Yellen’s second day of testimony on Capitol Hill and US reports on producer prices and weekly jobless claims may sway investor sentiment as the day progresses.
Overnight, the Dow Jones Industrial Average rose 0.6% to reach a fresh record closing high while the S&P 500 gained 0.7% and the Nasdaq Composite rallied 1.1%.
European markets rallied the most in 21/2 months on Wednesday as oil prices jumped, Burberry reported higher first-quarter comparable sales and underlying revenue and Yellen said some temporary factors are at work in holding down inflation.
The pan-European Stoxx Europe 600 index soared 1.5% to 384.90, marking its highest close in two weeks. The German DAX climbed 1.5%, France’s CAC 40 index jumped 1.6% and the UK’s FTSE 100 added 1.2%.
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