European Shares Set For Cautious Start Amid Rising US-China Tensions

European stocks are seen opening a tad lower on Wednesday as investors weigh improved China data against rising geopolitical tensions.

A private survey showed earlier today that China’s services activity grew at the fastest rate in 15 months in July as a result of easing COVID curbs.

Tensions between the U.S. and China mounted as U.S. House Speaker Nancy Pelosi arrived in Taiwan and batted for the country’s freedom.

China imposed trade sanctions against Taiwan and summoned the American envoy to Beijing to lodge a stern protest.

Terming the situation ‘extremely dangerous’, Beijing announced six exclusion zones encircling Taiwan to facilitate live-fire military drills from Thursday to Sunday. Russia has called Pelosi’s visit a ‘clear provocation’ aimed at containing China.

Elsewhere, reports suggest that the United States is considering limiting shipments of American chipmaking equipment to memory chip makers in China including Yangtze Memory Technologies Co Ltd (YMTC).

Asian markets traded mixed while the dollar climbed and yields pushed higher after a trio of Fed policymakers hinted at continuing aggressive interest rate hikes in the near term to tame inflation. Oil prices were subdued in Asian trading ahead of an OPEC+ crude production meeting.

Retail sales and final composite Purchasing Managers’ survey results from euro area are due later in the session, headlining a busy day for the European economic news.

Across the Atlantic, reports on ISM services and factory orders are awaited.

U.S. stocks ended lower for a second day running on Tuesday, as investors weighed the risks of worsening relationship between the U.S. and China as well as hawkish comments from regional presidents about the central bank’s path forward.

Job vacancies fell in June to their lowest level in nine months, raising economic slowdown fears. The Dow fell 1.2 percent, the S&P 500 shed 0.7 percent and the tech-heavy Nasdaq Composite slipped 0.2 percent.

European stocks fell on Tuesday amid rising Sino-U.S. tensions and concerns about slowing growth.

The pan European Stoxx 600 declined 0.3 percent. The German DAX slid 0.2 percent, France’s CAC 40 index gave up 0.4 percent and the U.K.’s FTSE 100 ended little changed with a negative bias.

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