Morning Bid: ECB up Next After Fed Lacks Clarity

ECB's Upcoming Decisions Follow Fed's Uncertain Rate Signals

A look at the day ahead in European and global markets from Kevin Buckland

Monetary policy has come sharply back into focus, now that tech shares have regained their composure following the DeepSeek shock at the start of the week.

The U.S. Fed, which held rates steady as expected, headlined a series of rate decisions overnight. Dovish comments by Chair Jerome Powell afterwards balanced the Fed's hawkish statement - and left traders uncertain on the likely timing of the next cut.

That contrasts with the outcomes from Sweden's Riksbank and the Bank of Canada, which both cut rates. However, the Riksbank signalled that its current easing cycle might be over, while the Canadian central bank cast uncertainty over the odds of yet another reduction in March by flagging potential inflationary risks from U.S. tariffs.

Cue the ECB, which like the Bank of Canada is viewed by traders as gearing up for rapid-fire cuts today, in March and in July, with high odds of another in December. But again, like the Canadians, the threat of tariffs from President Donald Trump looms large.

The White House says Trump still plans to make good on his promise of 25% levies on Canada and Mexico come Saturday, and a 10% duty on China is also "very much" in consideration, despite the friendly phone call Trump had with Xi Jinping this month.

Trump has also called out Europe in the opening days of his presidency, threatening punitive action if the bloc doesn't buy more American oil and gas. He has previously singled out cars, as well.

For markets today, European traders won't get very clear trading clues from Asia, with many of the region's markets shut for lunar New Year.

Still, Tokyo recovered from early losses to trade in the green, Sydney's bourse closed at a record high, and U.S. stock futures are gaining following Wall Street's weak close overnight.

Megacap "Mag 7" earnings kicked off on Wednesday with a mixed bag of results: Microsoft beat quarterly revenue estimates, while Tesla's fourth-quarter profit margin missed expectations. Meta forecast first-quarter revenue below market estimates.

Apple reports after the closing bell today.

European stocks start from a position of strength, after climbing to a record peak on Wednesday on strong results from Dutch chip equipment maker ASML.

Europe has plenty of earnings today, as well, from a diverse group of companies that includes ABB, Deutsche Bank, Hennes & Mauritz, Shell and STMicroelectronics.

Key developments that could influence markets on Thursday:

-ECB policy decision

-European earnings including ABB, Deutsche Bank, H&M, Roche, Shell, STMicro

-Apple earnings

(By Kevin Buckland; Editing by Edmund Klamann)