European Shares Set To Fall On Inflation Worries

European stock look set to open on a tepid note Tuesday as the 10-year U.S. Treasury yield pushed above 3 percent once again amid Fed tightening worries.

Asian stocks were mostly lower and regional currencies weakened on worries that the Federal Reserve’s rate hikes could drive the U.S. economy into a recession.

The dollar strengthened while the pound trimmed an advance after British Prime Minister Boris Johnson survived a confidence vote among Conservative MPs.

Oil prices rose in Asian trade on expectations of demand recovery in China as Beijing and the commercial hub Shanghai eased COVID-19 curbs and allowed more mobility.

Bitcoin fell back below the $30,000 mark, falling around 5 percent in the last 24 hours.

The European Central Bank meets on Thursday amid expectations it will confirm an end to its long-standing bond buying program and signal a rate hike in July.

Friday’s inflation numbers from the U.S. will provide more clues on the Fed’s rate-hiking path, with half-a-point interest rate hikes at the June and July policy meetings already priced in by markets.

Factory orders and construction Purchasing Managers’ survey results from Germany are due later in the session, headlining a light day for the European economic news.

Overnight, U.S. stocks came off early highs to end slightly higher as yields nudged up and crude oil prices briefly topped $120 per barrel for the first time since March, fueling worries about central bank policy tightening.

The Dow ended on a flat note, while the S&P 500 rose 0.3 percent and the tech-heavy Nasdaq Composite added 0.4 percent.

European stocks closed on a firm note Monday after a series of positive updates from China including the loosening of Covid-19 restrictions, improved services activity data and reports of possible U.S. tariff cut on Chinese goods.

The pan European Stoxx 600 advanced 0.9 percent. The German DAX rallied 1.3 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 both climbed around 1 percent.

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