FX.co ★ European Shares Seen Tad Higher Ahead Of US Inflation Update, Fed Minutes

European stocks are predicted to open slightly higher this Wednesday, thanks to the anticipation that mild inflation will prompt the European Central Bank (ECB) to reduce borrowing costs sooner than the Federal Reserve.

Last Thursday, once the ECB had decided to hold borrowing costs, it signaled that it would potentially make three or four rate reductions by year-end. Conversely, the U.S. interest rate trajectory remains uncertain. Investors are eagerly awaiting the U.S. Consumer Price Index data and the minutes from the Federal Reserve's March policy meeting to provide some guidance.

Also drawing investors' attention is the imminent U.S. first-quarter earnings season. Major banks such as Citigroup, JPMorgan, and Wells Fargo are due to report their financial results on Friday.

Meanwhile, Asian stocks remained steady or made slight gains, driven by positive performance in the technology and commodity sectors. Hong Kong's Hang Seng saw an over 2% increase following reports that Jack Ma endorsed the current leadership of the Alibaba Group in an internal memo.

In terms of the currency market, the U.S. dollar remained largely unchanged in Asian trading. Atlanta Fed's President Raphael Bostic reiterated his anticipation of a rate cut this year, however, he left open the possibility of revising his stance depending on economic shifts.

Concerns over the Russia-Ukraine conflict, instability in the Middle East, and support from momentum-chasing funds drove gold to a new record high. Oil prices remained stable following a two-day drop, as industry data highlighted an increase in U.S. crude stockpiles.

U.S. stocks fluctuated considerably before closing with mixed results overnight. Investors are awaiting further insight into the future course of interest rates. Rising metal prices and bond yields also stoked inflation fears in advance of significant inflation data and the announcement of bank earnings.

Contrastingly, European stocks closed lower on Tuesday, primarily due to increased geopolitical tensions and strong comments from Federal Reserve officials. The pan-European STOXX 600 fell by 0.6%, the German DAX by 1.3%, France's CAC 40 by 0.9%, and the U.K.'s FTSE 100 by 0.1%.