By Peter Nurse
Investing.com - European stock markets are expected to open higher Wednesday, rebounding after Federal Reserve chairman Jerome Powell guaranteed a rough end to November with his hawkish turn in Congress on Tuesday.
Powell signalled on Tuesday the U.S. central bank may speed up the pace of its bond-buying taper at its meeting later this month, acknowledging that inflation is proving to be more sustained and troublesome than he had expected.
At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 1% higher, CAC 40 futures in France climbed 1.3% and the FTSE 100 futures contract in the U.K. rose 0.6%.
The positive start to December comes after global stock markets had ended the previous month with sharp losses as fears about the impact of the new coronavirus variant triggered a broad sell-off.
Helping the tone were comments from Israeli Health Minister Nitzan Horowitz, who stated late Tuesday that early data showed that those who have three doses of the Pfizer (NYSE:PFE) Covid vaccine are well protected against the new omicron variant.
Investors had been fretting over the efficacy of the current vaccines in combating the new variant after Moderna (NASDAQ:MRNA) chief Stephane Bancel predicted a ‘material drop’ in their effectiveness earlier this week.
“The only winner in December is likely to be volatility as The Street sells everything on any negative omicron headline, and then buys everything back on any hint that the new variant isn’t as serious as we all thought,” said Jeffrey Halley, an analyst at MarketPulse, in a note.
Turning to economic data, China's factory activity fell back into contraction in November, according to a business survey, with the Caixin/Markit Manufacturing Purchasing Managers' Index dropping to 49.9 in November from 50.6 the month before.
The equivalent data is also due from the Eurozone later Wednesday, while German retail sales fell 2.9% on the year in October, a sharp retreat from the -0.9% figure seen the month before.
Crude prices traded higher Wednesday, recouping some of the hefty losses of the previous session, ahead of a key meeting of top producers to decide future output levels.
The Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+, gets together on Thursday. Expectations are growing that the members will agree to pause plans to add 400,000 barrels per day of supply in January given the potential hit to demand from the travel restrictions put in place to tackle the new omicron variant.
The American Petroleum Institute reported a fall of 747,000 barrels from U.S. crude inventories for last week, a smaller draw than expected, and investors now await crude oil supply from the U.S. Energy Information Administration at 10:30 AM ET.
By 2:05 AM ET, U.S. crude futures traded 2.7% higher at $67.95 a barrel, having slumped 5.4% on Tuesday, while the Brent contract rose 3% to $71.30, after falling 3.9% during the previous session.
Additionally, gold futures rose 0.7% to $1,789.50/oz, while EUR/USD traded largely flat at 1.1335.