European Shares Poised For Lower Open On China Woes

European Shares Poised For Lower Open On China Woes

August 24, 2023

European stocks may open lower on Friday amid concerns about spreading debt defaults in China’s property market and shadow banking industry.

China’s property developer Evergrande filed for bankruptcy protection in a U.S. court, raising concerns about ripple effects.

A liquidity crisis at one of China’s top asset managers Zhongzhi Enterprise Group has raised worries of a contagion risk to the financial sector.

Asian markets were subdued after upbeat U.S. economic data released overnight added to fears of interest rates remaining higher for longer.

Investors now look to next week’s gathering of policymakers at Jackson Hole in Wyoming for clues on the outlook for interest rates.

The Office for National Statistics is set to issue U.K. retail sales for July later in the day. Sales are forecast to fall 0.5 percent on month, in contrast to the 0.7 percent rise in June.

Eurostat is scheduled to release euro area final inflation figures for July. Inflation is forecast to slow to 5.3 percent, as initially estimated, from 5.5 percent in June.

The dollar and bond yields pulled back, helping gold inch higher in cautious Asian trade. Oil prices were slightly lower after snapping a three-day losing streak on Thursday.

U.S. stocks fell for a third consecutive session overnight as yields on long-term Treasury Notes climbed to a 16-year high on fears of further interest rate hikes by the Federal Reserve.

New jobless claims data pointed to a still tight labor market and a gauge of regional manufacturing activity rebounded in August to show its first positive reading in nearly a year, keeping alive fears of interest rates remaining higher for longer.

The Dow and the S&P 500 both dropped around 0.8 percent, while the tech-heavy Nasdaq Composite shed 1.2 percent.

European stocks also fell for a third day running on Thursday amid lingering China, inflation and interest-rate concerns. The pan European STOXX 600 gave up 0.9 percent.

The German DAX declined 0.7 percent, France’s CAC 40 slipped 0.9 percent and the U.K.’s FTSE 100 ended 0.6 percent lower.

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