European Shares Set To Fall Amid War Fears

stockmarkets aug16 14feb22 lt

European stocks are seen opening lower on Monday amid warnings that Russia could invade Ukraine at any time.

The United States on Sunday said Russia might create a surprise pretext for an attack, as it reaffirmed a pledge to defend "every inch" of Nato territory.

Some airlines cancelled flights to the Ukrainian capital amid heightened fears that an invasion by Russia is imminent despite intensive weekend talks between the Kremlin and the West.

Asian markets fell as the hardening of oil prices posed a major upside risk to the inflation outlook.

Oil surged toward $100 a barrel for the first time since 2014 while gold eased from a three-month high touched in the previous session, pressured by a stronger U.S. dollar and rising bond yields.

As investors price a 50 bps rate hike next month and more than 160 bps of tightening by the end of the year, San Francisco Fed President Mary Daly struck a more cautious note in an interview on Sunday, saying being too "abrupt and aggressive" on policy could be counter-productive.

St. Louis Fed President James Bullard and ECB President Christine Lagarde will be speaking later in the day.

Traders are also likely to pay close attention to U.S. reports on producer prices, retail sales and industrial production as well as the minutes of the latest Federal Reserve meeting this week for further clues on the interest rate outlook.

U.S. stocks fell sharply on Friday and oil prices surged as investors sought safety in Treasuries amid concerns about a potential Russian invasion of Ukraine. Any Americans still in Ukraine should leave "immediately," the White House said in the face of possible invasion within days.

The tech-heavy Nasdaq Composite lost as much as 2.8 percent, while the Dow shed 1.4 percent and the S&P 500 declined 1.9 percent.

European stocks closed lower on Friday on U.S. rate hike jitters following hawkish comments from Federal Reserve Bank of St. Louis President James Bullard.

The pan European Stoxx 600 gave up 0.6 percent. The German DAX slipped 0.4 percent, France's CAC 40 index dropped 1.3 percent and the U.K.'s FTSE 100 eased 0.2 percent.

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