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European Shares Set To Fall; FTSE May Outperform As Pound Hits Record Low

stockmarkets jan18 26sep22 lt

European markets are seen opening broadly lower on Monday, though U.K. stocks may see some benefit from a weakening pound, which plunged to a record low against the dollar on recession fears after new finance minister Kwasi Kwarteng unveiled a controversial tax-cutting mini-budget.

Asian markets retreated amid fears regarding slower economic growth and a possible global recession.

London copper prices hit a more than two-month low and gold was pinned near a 2-1/2-year low, as the dollar rallied, and bond yields climbed after several central banks led by the U.S. Federal Reserve signaled a hawkish outlook for interest rate hikes.

Oil prices extended losses in Asian trade after falling sharply to eight-month lows last week on recession worries.

In economic releases, Germany's ifo business confidence survey data is due later in the session. The business sentiment index is expected to fall to 87.0 in September from 88.5 in the previous month.

Across the Atlantic, this week's trading may be impacted by reaction to reports on durable goods orders, consumer confidence, new home sales and personal income and spending.

The much-anticipated growth figures of the U.S. GDP and a batch of speeches from Federal Reserve officials including Bullard, Bowman and Powell would also be keenly watched.

U.S. stocks tumbled on Friday to suffer losses for the fourth day running amid concerns over aggressive monetary policy tightening and foreign currency turmoil.

The Dow dropped 1.6 percent to its lowest closing level since November 2020, while the S&P 500 shed 1.7 percent and the tech-heavy Nasdaq Composite declined 1.8 percent to hit three-month closing lows.

European stocks slumped on Friday to hit multi-month lows amid heightened recession risks, with the British government unleashing historic tax cuts and huge increases in borrowing.

The pan European Stoxx 600 plunged 2.3 percent. The German DAX and the U.K.'s FTSE 100 both fell around 2 percent while France's CAC 40 index plummeted 2.3 percent.

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