European stocks higher after mixed Fed minutes

• European markets push higher in early trade
• Mixed FOMC minutes fail to deter dovish rate outlook
• Energyin focus as WTI rises to a one-week high

European markets have kicked off the session on a positive footing, seemingly undeterred by yesterday’s mixed Fed minutes. This week has brought plenty of concern for bulls, with Apple leading the tech sector jitters that brought a sharp decline for the Nasdaq. Nonetheless, a raft of data points out of the eurozone have helped strengthen sentiment, as a weaker than expected French CPI figure (0.1%) came alongside upward revisions to the eurozone services PMI reading.

Yesterday’s FOMC minutes brought a little bit of something for everyone, with members expressing caution as they attempt to drive inflation back down to target. While they currently do not see any upside risk to inflation, there is a concern that they could stall the current disinflation should they pivot too swiftly. Nonetheless, the key takeaway is that they are looking at the six-month metric for the core PCE, which has already dropped below 2%. With that in mind, markets have remained highly dovish, expecting a whopping six rate cuts this year from the Fed. All eyes will now turn towards the US employment data, with today’s ADP payrolls figure leading into tomorrow’s jobs report. With Fed member Barkin speculating that a soft-landing looks increasingly likely, a gradual deterioration in the payrolls and unemployment rate could help put pressure on the FOMC to cut rates in March.

Energy prices have been on this rise over the course of this week, with this week’s Israeli attack on the Hamas leadership in Lebanon bringing increased concerns over a likely escalation of the conflict. With the US-led coalition struggling to contain Red Sea attacks, there are concerns that we could see the flow of goods impacted for a prolonged period of time. Comments alongside today’s Next earnings highlighted the potential impact of this current breakdown in trade, with the high street name expecting to see supply issues arise in early 2024 should the current issues persist. While the Red Sea disruption has impacted containers more than oil tankers, WTI has nonetheless reacted to recent developments in the region to push into a fresh one-week high this morning.