European Shares Poised For Steady Start

European Shares Poised For Steady Start

December 21, 2021

European stocks may open flat to slightly higher on Wednesday, as investors react to mixed China data and await a decision on asset tapering and interest-rate rises by the Federal Reserve.

Industrial output in China was up 3.8 percent year-on-year in November, the National Bureau of Statistics said – exceeding expectations for an increase of 3.6 percent and up from 3.5 percent in October.

However, retail sales increased 3.9 percent on year, missing expectations for a gain of 4.6 percent and down from 4.9 percent a month earlier amid new Covid-19 outbreaks in the country.

Fixed asset investment climbed an annual 5.2 percent – missing forecasts for 5.4 percent and down from 6.1 percent in the previous month.

The jobless rate came in at 5.0 percent, up from 4.9 percent in October, while the house price index fell from 3.4 percent to 3.0 percent.

Meanwhile, with inflation remaining at an elevated rate, the Fed is widely expected to accelerate its timetable for reducing bond purchases later in the day.

Many traders expect the Fed to begin raising interest rates shortly after bringing its asset purchase program to a halt.

Along with the Fed announcement, investors await a slew of U.S. economic data, including reports on retail sales, import and export prices, and homebuilder confidence later in the day for clues on the economic outlook.

The monetary policy announcements from the European Central Bank, the Bank of Japan, the Bank of England and the Swiss National Bank are also due this week.

It’s a relatively busy day ahead on the Eurozone’s economic calendar, with inflation figures for U.K., France, Spain, and Italy likely to be in focus in the early part of the session.

U.S.-China tensions also remain on investors’ radar, with reports suggesting that the Biden administration is considering imposing tougher sanctions on Semiconductor Manufacturing International Corp., China’s largest chipmaker.

On the Covid-19 front, the WHO chief told reporters that 77 countries have now reported cases of Omicron and the variant of coronavirus was spreading at an unprecedented rate.

Asian markets were mostly lower, ten-year yields nudged up and the dollar held its recent gains, as investors brace for a hawkish statement from the Federal Reserve.

U.S. stocks ended lower overnight as the Federal Reserve’s two-day meeting got underway and data showed producer prices increased by more than expected in November.

The Dow dipped 0.3 percent, the tech-heavy Nasdaq Composite shed 1.1 percent and the S&P 500 declined 0.8 percent.

European stocks fell for a fifth straight session on Tuesday after the World Health Organization warned the new variant is spreading faster than previous strains.

The German DAX tumbled 1.1 percent, France’s CAC 40 index gave up 0.7 percent and the U.K.’s FTSE 100 eased 0.2 percent.

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