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European Shares Seen Up In Cautious Trade

stockmarkets aug15 04jul22 lt

European stocks may open on a positive note Monday, with trading volumes likely to remain thin amid the Independence Day holiday in the United States.

Asian markets traded mixed after coronavirus clusters emerged in eastern China over the weekend, posing a new threat to China's economic recovery.

The dollar held firm on growth worries while gold inched higher in choppy trade, helped by lower Treasury yields. Oil prices slipped in Asian trade after rising more than 2 percent in the previous session.

Traders await the FOMC meeting minutes, key speeches by Fed officials and the June jobs report this week for clues about the long-term outlook for the U.S. economy.

U.S. hiring is expected to have slowed in June while the minutes from the Fed's June meeting are almost certain to sound hawkish.

Markets currently see a 90 percent chance of a 75-basis point rate rise in the Fed Funds rate at the July meeting and a 3.5 percent terminal rate by year end.

Closer home, Destatis releases Germany's foreign trade figures later in the day. Exports and imports are forecast to grow 0.9 percent each on a monthly basis in May.

Eurostat is slated to publish euro area producer prices for May. Economists expect producer price inflation to ease to 36.7 percent from 37.2 percent in April.

U.S. stocks rose sharply on Friday and Treasury yields extended recent decline, as weak manufacturing and construction spending data helped raise expectations that the Federal Reserve might opt for a less aggressive pace of rate hikes in the months ahead.

The Dow and the S&P 500 both climbed around 1.1 percent while the tech-heavy Nasdaq Composite shed 0.9 percent.

European stocks ended narrowly mixed on Friday after the release of worrisome manufacturing and inflation data. The pan European Stoxx 600 closed flat with a negative bias.

The German DAX edged up 0.2 percent and France's CAC 40 index inched up 0.1 percent, while the U.K.'s FTSE 100 finished marginally lower.

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