European Shares May Follow Asian Peers Lower On Fed UncertaintyNovember 23, 2022
European stocks are seen opening lower on Thursday, as investors fret about the impact of China’s zero-COVID strategy and stalling U.S. consumer spending, heading into the holiday season.
Asian markets traded broadly lower, with Chinese and Hong Kong stocks leading regional losses, as a flare up in domestic COVID-19 cases spurred concerns over more broader lockdowns.
The dollar index climbed, as investors tried to assess the outlook for rates following stronger-than-expected retail sales data and hawkish remarks from a slew of Federal Reserve officials.
San Francisco Fed President Mary Daly told CNBC that pausing rate hikes is not yet part of the discussion.
New York Fed President John Williams said the central bank should avoid incorporating financial stability risks into its considerations.
Fed Governor or Christopher Waller stressed that he won’t make a judgement about the pace of rate hikes until he sees more data, including the next PCE inflation report and the next jobs report.
An inversion of the U.S. yield curve deepened further, suggesting that the Fed may continue raising rates to curb inflationary pressures.
Goldman Sachs Group said that inflation will likely remain too high, and policymakers have to counter any premature easing.
Gold prices fell on dollar strength and easing geopolitical tensions, while oil extended fell over 1 percent to extend overnight losses after Russian oil shipments via the Druzhba pipeline to Hungary restarted.
In economic releases, final readings of Eurozone inflation for October are due later in the day.
Across the Atlantic, traders are likely to keep an eye on reports related to weekly jobless claims, housing starts and Philadelphia-area manufacturing activity.
U.S. stocks fell overnight as investors reacted to retail giant Target’s warning of weaker holiday spending and a mixed batch of data on retail sales, industrial production and homebuilder confidence.
The tech-heavy Nasdaq Composite tumbled 1.5 percent while the S&P 500 gave up 0.8 percent and the Dow slipped 0.1 percent.
European stocks fell for the first time in four days on Wednesday, as geopolitical tensions injected some volatility, the ECB warned of growing risks to the financial system and data showed U.K. inflation soared to a 41-year high in October.
The pan European Stoxx 600 fell 1 percent even as NATO’s chief said there are no indications that the deadly explosion in Poland was an intentional attack by Russia.
The German DAX lost 1 percent, France’s CAC 40 index dipped half a percent and the U.K.’s FTSE 100 eased 0.3 percent.
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