European Shares Set To Open On Cautious Note

European stocks are seen opening on a cautious note Wednesday as a batch of upbeat U.S. economic data raised concerns that the Federal Reserve may tighten policy rates faster than expected.

Asian markets were broadly lower, while bond yields edged higher and the dollar index rose to a 16-month high amid worries that uncomfortably high rates of inflation may be around for one to three years.

Emerging-market Asian currencies declined and the Turkish lira extended a drop before a central bank meeting.

St. Louis Fed president James Bullard said on Tuesday that the Fed should “tack in a more hawkish direction” in preparation for longer-term high inflation.

Amid heightened concerns over inflation, markets are waiting to see whether President Joe Biden decides to nominate Fed Chair Jerome Powell for a new term.

Meanwhile, Treasury Secretary Janet Yellen told congressional leaders Tuesday that the federal government would be at risk of default unless lawmakers lift the legal debt ceiling by Dec. 15.

Gold, often viewed as an inflation hedge, edged up slightly in Asian trade while oil prices fell about 1 percent amid fears of a possible Strategic Petroleum Reserve release. The cryptocurrency cart continued to bleed, with Bitcoin slipping below the $60,000 level.

Consumer price data from the U.K. is due later in the session, headlining a light day for the European economic news.

Eurostat publishes euro area final consumer prices for October. Inflation is expected to match the flash estimate of 4.1 percent versus 3.4 percent in September.

Across the Atlantic, the Commerce Department’s report on new residential construction as well as comments by a number of Fed officials may chart market direction.

U.S. stocks advanced overnight as Home Depot and Walmart released results that topped expectations and readings on industrial production and retail sales topped forecasts.

The Dow edged up 0.2 percent, the S&P 500 gained 0.4 percent and the tech-heavy Nasdaq Composite climbed 0.8 percent.

European markets extended their record rally on Tuesday as optimism over the Sino-U.S. talks offset concerns surrounding an unusual build-up of Russian troops in and around Ukraine.

The pan European Stoxx 600 gained 0.2 percent. The German DAX rose 0.6 percent and France’s CAC 40 index edged up 0.3 percent while the U.K.’s FTSE 100 dipped 0.3 percent.

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