European Shares May See Cautious Start Ahead Of Central Bank Meetings
European stocks are likely to open on a cautious note Monday as investors await a slew of central bank meetings this week for additional cues on the pace of rate rises.
The U.S. Federal Reserve is all set to raise rates by 50 basis (bps) points on Wednesday after lifting rates by 75 bps in each of the last four meetings held between May and November 2022.
That said, a hawkish set of dots from the Fed and statement from Chair Jerome Powell could boost the dollar and treasury yields.
Meanwhile, the U.S. consumer inflation report for November is due on Tuesday, which may indicate inflation is sticky and interest rates may have to stay higher for longer.
Eurozone and the U.K.’s inflation numbers as well as rate decisions from the European Central Bank and the Bank of England will also be in the spotlight this week.
Asian markets were broadly lower and U.S. index futures slipped while the dollar benefited from the risk-off sentiment.
A deepening COVID-19 gloom in Beijing added to economic uncertainty, with Hong Kong’s Hang Seng index down 1.7 percent.
Benchmark U.S. Treasury yields eased slightly to 3.5820 percent, after having jumped 9 basis points to just below 3.6 percent on Friday.
Gold slipped half a percent to trade below $1,800 per ounce, while oil prices rose about 1 percent after falling about 11 percent in the previous week on worries about fuel demand.
GDP monthly estimates and foreign trade figures from the U.K. are due later in the session, headlining a light day for the European economic news.
U.S. stocks fell on Friday and Treasury yields rose, as a measure of consumer sentiment exceeded expectations in December and producer price data for November indicated that inflation is stickier than most assume, complicating the Fed’s task to slow the pace of its rapid interest-rate hikes.
The Dow dropped 0.9 percent, while the tech-heavy Nasdaq Composite and the S&P 500 both shed around 0.7 percent.
European stocks finished Friday’s session on a brighter note as China loosened some of the world’s strictest COVID-19 restrictions.
The pan European STOXX 600 climbed 0.8 percent. The German DAX rose 0.7 percent, France’s CAC 40 index gained half a percent and the U.K.’s FTSE 100 finished marginally higher.
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