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European Shares Seen Up As Treasury Yields Ease

stockmarkets jan04 11jan22 lt

European stocks may open on a positive note Tuesday despite rising bets for quicker interest rate hikes.

Traders look to incumbent Fed Chairman Jerome Powell's nomination hearing later in the day for new clues on the timing and pace of policy normalization.

In his prepared opening remarks, released Monday, Powell acknowledged that high inflation is taking a toll on American families.

A pullback in both the dollar and 10-year treasury yields supported gold ahead of U.S. inflation data due on Wednesday.

Fed funds futures have priced in an almost 90 percent chance of a rate hike in March and a more than 90 percent chance of another one by June.

Goldman Sachs expects the Fed to raise interest rates four times this year, matching the view of analysts at J.P. Morgan and Deutsche Bank.

Asian markets traded mixed after the S&P 500 closed lower for the fifth consecutive session, its longest losing streak in over three months.

Investors watched the latest developments regarding Covid-19 after the U.S. logged a record number of Covid hospitalizations at 132,646.

Oil resumed its upward trend after two days of losses. Bitcoin recovered to trade above $42,000 after dipping below $40,000.

Overnight, U.S. stocks succumbed to an early sell-off before ending mixed as rate hike bets lifted the 10-year Treasury yield to a two-year high.

The tech-heavy Nasdaq Composite tumbled as much as 2.7 percent before finishing marginally higher as yields pulled back off their highs. The S&P 500 slid 0.1 percent and the Dow dropped half a percent.

European stocks closed Monday's session lower amid Omicron and rate hike worries. The pan European Stoxx 600 declined 1.5 percent.

The German DAX lost 1.1 percent, France's CAC 40 index tumbled 1.4 percent and the U.K.'s FTSE 100 shed half a percent.

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