Equities are struggling with key supports ahead of the ECB meeting

A rising inflation rate and slowing global growth have weighed on the stock markets in Europe on Thursday, as investors remained cautious ahead of the European Central Bank's meeting.

According to earlier released data in China, factory gate inflation hit a 13-year high in August, with producer prices rising 9.5% from a year earlier, driven by soaring raw materials prices.

Amid this backdrop of rising global inflation, the ECB will have to assess the strength of the regional economic recovery to determine whether a reduction in bond buying is imminent.

FTSE100 breaks the long-term uptrend line

Dow Jones Industrial Index, FTSE and DAX are challenging their crucial support levels after breaking below their one-year uptrend line. At the same time, Nasdaq and S&P500 continue to fall from their record highs.

Due to so much uncertainty, there is no clear theme emerging in the equity markets. It should not be surprising, then, that it has been the US dollar, which has staged an impressive comeback, benefited most from prevailing risk-averse sentiment.

FTSE 100 is struggling with the critical support level at 7000 after a decisive penetration of the one-year uptrend line. A break below this level would encourage sellers to keep their eyes on 67800 in the meantime. Otherwise, if buyers manage to hold the ground, the index should recapture the peak of the week at 7200.

Events of the day

The ECB Monetary statement is set to release at 2:45 EEST.

The ECB press conference will begin at 15:30 EEST.

Recent spikes in the Eurozone inflation rate to its highest levels in over a decade sparked hawkish statements from policymakers at the ECB. Therefore, market participants will focus on the debate about reducing the pace of the current emergency stimulus program (PEPP) and the central bank's inflation outlook.

The timing of the eventual end of emergency support, currently planned for March, will likely not be discussed by policymakers, and an important decision will be left until December.

US Energy Information Administration is scheduled to release official crude supply data later today at 18:00 EEST.