European Shares Seen Lower On Debt Ceiling, Inflation Worries

European stocks are seen opening lower on Friday after the U.S. Congress voted through a short-term spending bill to avert a government shutdown, but a potential debt default still loomed.

Republicans say they will not support a debt limit hike as long as the Biden administration and Democrats stick to the ambitious spending plan.

Treasury Secretary Janet Yellen says that any default on U.S. debt would cause irreparable harm as well as an ensuing financial crisis and recession.

Investors may also react to fresh comments from Fed Chairman Jerome Powell that the central bank could face difficult decisions next year if inflation remains high.

Asian stocks fell in thin holiday trade, with Chinese markets closed for a week for the Golden Week holiday.

Inflation worries persisted, with central banks of Czechoslovakia, Mexico and Colombia raising rates by 75 bps (to 1.5 percent), 25 bps and 25 bps respectively.

The dollar held steady near its highest level of the year, while gold eased after rallying to a one-week high above the key $1,750 level in the previous session.

Oil prices dipped on the prospect that the OPEC+ supplier alliance might step up a planned increase in output.

It’s another busy day ahead on the European economic calendar, with German retail sales, manufacturing PMI figures and prelim September inflation figures for the euro zone likely to be in focus.

Across the Atlantic, reports on personal income and spending, manufacturing activity, construction spending and consumer sentiment may sway sentiment.

U.S. stocks fell sharply overnight as concerns about the timing and pace of the Fed’s monetary easing plan overshadowed news that the Senate and the House both passed a stopgap spending bill.

The Dow slumped 1.6 percent to reach a three-month closing low, while the S&P 500 shed 1.2 percent and the tech-heavy Nasdaq Composite eased 0.4 percent to end at their lowest closing levels in over two months.

European stocks fell on Thursday amid concerns over rising bond yields and signs of slowing growth.

The pan European Stoxx 600 ended flat with a negative bias. The German DAX dropped 0.7 percent, France’s CAC 40 index declined 0.6 percent and the U.K.’s FTSE 100 eased 0.3 percent.

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