European Shares Likely To Open On Subdued Note

European Shares Likely To Open On Subdued Note

August 30, 2022

European stocks look set to open on a sluggish note Wednesday as weak U.S. data released overnight raised worries that a recession may indeed be on the way.

Gold traded flat as the dollar ticked higher and benchmark U.S. 10-year Treasury yields hovered near a more than one-month high on worries about inflation and tighter monetary policy.

Federal Reserve Bank of Minneapolis President Neel Kashkari said on Tuesday inflation is much more embedded at a much higher level and the central bank has to be more aggressive to bring it under control.

On the other hand, Goldman Sachs Group Inc. Chief Economist Jan Hatzius said he expects Fed Chair Jerome Powell to lay out a case for slower increases at his upcoming Jackson Hole speech on Friday.

Focus is also on minutes of the ECB’s last policy meeting due this week that may sound hawkish.

The euro is likely to slide further away below 20-year lows against the dollar amid much uncertainty around the supply of natural gas from Russia, a Citi strategist told CNBC on Tuesday.

Asian markets traded mixed, with Chinese and Hong Kong stocks suffering heavy losses, as a severe drought and power shortages in the Sichuan province spurred the closing of several major factories.

Oil prices fell slightly in Asian trade after a nearly 4 percent surge overnight as de facto OPEC leader Saudi Arabia flagged the possibility of introducing cuts to balance a market it described as “schizophrenic”.

U.S. stocks closed lower for a third straight session overnight as a slew of disappointing economic readings added to economic woes.

Business activity contracted for as second straight month in August, factory activity in the U.S. central Atlantic region contracted in the month and sales of new single-family homes plunged to a 6-1/2-year low in July, adding to concerns about economic slowdown and tighter monetary policy.

The Dow dipped half a percent, the S&P 500 eased 0.2 percent and the tech-heavy Nasdaq Composite ended flat with a negative bias.

European stocks extended losses for a third straight session on Tuesday as the region’s energy crisis worsened and survey readings for euro area manufacturing and services pointed towards economic contraction in the third quarter.

The pan European Stoxx 600 shed 0.4 percent. The German DAX and France’s CAC 40 index both slipped around 0.3 percent, while the U.K.’s FTSE 100 gave up 0.6 percent.

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