European markets were seen cautiously higher Wednesday after comments from U.S. Federal Reserve officials signaled openness to further rate cuts, offering some relief after a punishing session for global markets as hopes of a resolution to the U.S.-China trade war faded.
The FTSE 100 was seen around 14 points higher at 7,157, the DAX was expected to open around 23 points higher at 11,993, and France’s CAC 40 looked set to open up around 14 points at 5,471, according to IG data.
Markets worldwide suffered on Tuesday as the U.S. imposed visa restrictions on Chinese officials in response to the detention or abuse of Muslim minorities, having already blacklisted 28 Chinese companies over their alleged involvement in the treatment of ethnic Uighurs in Xinjiang province, angering Beijing.
The world’s two largest economies are still set for high-level trade negotiations in Washington on Thursday.
Tensions are also heightened due to a stand-off between Beijing and the U.S. National Basketball Association (NBA) following a tweet from Houston Rockets general manager Daryl Morey supporting pro-democracy protests in Hong Kong.
Asian stocks traded lower Wednesday afternoon amid the rising uncertainty over trade, with Hong Kong’s Hang Seng index leading losses.
Federal Reserve Chairman Jerome Powell on Tuesday implied the central bank was open to further interest rate cuts to avert global economic risks, reiterating that the Fed would act as appropriate while suggesting that U.S. economic expansion would continue. Chicago Fed President Charles Evans also said further cuts could provide insurance against economic headwinds and boost inflation.
Back in Europe, U.K. Prime Minister Boris Johnson faces a potential mutiny from within his own cabinet over fears about a disorderly no-deal exit from the European Union, The Times newspaper reported Wednesday.
Meanwhile a Downing Street spokesperson said on Tuesday that Johnson and his Irish counterpart Leo Varadkar, in a phone conversation, had reiterated their mutual desire to agree a Brexit deal before the October 31 deadline.
The EU on Tuesday accused Britain of playing a “stupid blame game” over Brexit, after a Downing Street source was reported to have accused German Chancellor Angela Merkel of making unacceptable demands.