(RTTNews) - European stocks are seen opening broadly higher on Wednesday as unexpectedly weak December U.S. retail sales data prompted traders to price in a further two rate cuts of 25 basis points from the Federal Reserve this year.
With Federal Reserve officials signaling patience on rate cuts, the focus now shifts to the delayed jobs report later in the day and the CPI report on Friday. Inflation and job creation are expected to hold steady, but revisions to the 2025 jobs numbers are expected to be large.
U.S. Commerce Secretary Howard Lutnick on Tuesday said the present level of dollar is more balanced and is beneficial for promoting exports and economic growth.
He anticipates the GDP could exceed 5 percent in the fourth quarter of 2025 and possibly surpass 6 percent in the first quarter of 2026.
White House economic advisor Kevin Hassett recently warned that U.S. labor market data could be weaker in the near term.
Asian markets were broadly higher as rate cut expectation lifted U.S. equity futures. Investors also weighed China's latest inflation figures.
China's annual consumer price inflation unexpectedly cooled from 0.8 percent in December to 0.2 percent in January, raising fresh concerns about persistent deflationary pressures in the world's second-largest economy.
The deflation in producer price inflation persisted, with prices falling 1.4 percent year-on-year in January after declining 1.9 percent in December.
The dollar dropped against all of its major peers and U.S. Treasury yields fell across the curve following the release of weak U.S. retail sales data.
Gold traded up half a percent above $5,050 an ounce. Oil edged higher as traders assessed the risks of supply disruptions in the Middle East ahead of a meeting between Israeli Prime Minister Benjamin Netanyahu and U.S. President Donald Trump.
Overnight, U.S. stocks ended mixed after two days of gains. The Dow inched up 0.1 percent, but the S&P 500 dipped 0.3 percent and the tech-heavy Nasdaq Composite shed 0.6 percent as data showed U.S. retail sales unexpectedly stalled in December and household debt rose to a new record high in Q4 2025.
Financial services stocks tanked after tech platform Altruist introduced a new AI-powered tax planning tool for wealth advisors and clients.
Traders also reacted to comments from Federal Reserve Bank of Cleveland President Beth Hammack that interest rates could be on an extended hold.
Her Dallas counterpart Lorie Logan said she believes the Federal Reserve's interest-rate stance is set well for the risks facing the economy.
In Europe, stocks turned in a mixed performance on Tuesday after hitting record highs in the previous session.
The pan European Stoxx 600 finished marginally lower. While France's CAC 40 closed marginally higher, the German DAX slipped 0.1 percent and the U.K.'s FTSE 100 dropped 0.3 percent.
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