European stocks are set to open flat Thursday morning as economic data give more emphasis to a U.S. rate hike and market liquidity is scarce due to the Thanksgiving holiday.
The FTSE 100 should open 6 points lower at 6,811; the DAX is seen 1 point higher at 10,663; and the CAC is set to start 2 points lower at 4,527.
Thyssenkrupp misses forecasts
Data released Wednesday showed new manufacturing orders and consumer sentiment increasing in the U.S. in the month of October, giving further reasons for a rate hike next month, when the Federal Reserve meets.
The British-Australian Rio Tinto announced Thursday plans to raise its cash flow by $5 billion over the next five years. The firm wants to expand on iron ore, copper and bauxite.
The German company Thyssenkrupp reported a smaller-than-expected increase in operating profit Thursday and highlighted more cost cutting.
Oil prices were flat during Thursday’s morning session with investors uncertain over whether OPEC countries will agree on a production cut when they meet next week.
In terms of data, the German Ifo Institute is releasing its latest business climate analysis at 9 a.m. London time and the European Central Bank is publishing its Financial Stability Review. Public sector workers are staging a 24- hour strike in Greece against austerity measures.
The dollar firmed in Asian trading on Thursday after data suggesting a pickup in U.S. economic growth early in the fourth quarter increased chances of the Federal Reserve raising interest rates.
The dollar index, which tracks the greenback against a basket of six major peers, rose 0.1 percent to 101.77, pushing back toward its overnight high of 101.91, its highest in nearly 14 years.
U.S. markets will be closed Thursday for the Thanksgiving holiday, while Tokyo markets were closed for a public holiday on Wednesday.
Investors are now pricing in a nearly 100 percent probability of a December Fed rate increase, according to CME FedWatch, and some investors expect more hikes next year if economic momentum is sustained.
“The momentum for the weaker yen could continue through the end of the year, since we are thinking the Fed will make two or three interest rate hikes in 2017,” said IHS Markit’s principal economist in Tokyo, Harumi Taguchi.
Oil prices were little changed on Thursday as uncertainty ahead of a planned OPEC-led crude production cut and thin liquidity due to the U.S. Thanksgiving holiday kept traders from making big new bets on markets.
International Brent crude oil futures were trading at $49.00 at 0403 GMT, up 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were at $48.04 per barrel, up 8 cents from their last settlement.
Traders said market activity was low due to the U.S. holiday, and there was a reluctance to take on big price directional bets due to uncertainty about a planned oil production cut, led by the Organization of the Petroleum Exporting Countries (OPEC).
“We expect OPEC will reach an agreement at next week’s biannual meeting in Vienna… If OPEC does successfully reach an agreement, prices are likely to test the year high in Brent of $53 per barrel,” ANZ bank said in a note to clients on Thursday.
But it added that “investor positioning data and price action suggest the market remains unconvinced,” and that net long positions, which would profit from rising prices, were still at lows not seen since oil hit $27 per barrel earlier this year.