European stocks are set to open higher on Friday as market players increase their bets the U.S. Federal Reserve will cut interest rates this month.
Britain’s FTSE 100 was seen 31 points higher at 7,524, Germany’s DAX up by 75 points at 12,310, and France’s CAC climbing 31 points at 5,584, according to IG index data.
Investors digested comments from a top Fed official that suggested the central bank would implement a pre-emptive “insurance” rate cut aimed at averting a major slump in economic growth.
New York Fed President John Williams said the Fed should “act quickly” while the economy is slowing and rates are low. “It’s better to take preventative measures than to wait for disaster to unfold,” he said in a speech Thursday.
However, a New York Fed spokesperson tried to temper those expectations after Williams’ speech, telling CNBC that his comments were part of an academic talk and “not about potential policy actions.”
Markets in Asia nevertheless got a boost from Williams’ comments. The MSCI’s broadest index of Asian shares excluding Japan jumped 1%.
Meanwhile, geopolitical tensions between the U.S. and Iran have given oil prices a boost. The U.S. Navy shot down an Iranian drone in the Strait of Hormuz, a key chokepoint for global crude flows.
Brent crude futures rose over 2% to $63.22 a barrel, while U.S. light crude futures climbed 1.7% to $56.26.
Elsewhere, investors looked for signs of progress in the U.S.-China trade dispute. U.S. and Chinese officials spoke over the phone Thursday, with Treasury Secretary Steven Mnuchin suggesting face-to-face talks could follow.
In terms of corporate earnings, British Land will report full-year results Friday.
As for economic data, German inflation and euro zone growth figures are due in the morning.