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European Shares Set For Soft Start As Oil Prices Jump

european market 021219 03oct22 lt

European stocks may open lower on Monday as higher-than-expected U.S. inflation data and sharp moves in the price of oil added to worries about slowing global growth.

Both Brent and WTI crude futures jumped around 3 percent in Asian trade amid reports that OPEC+ may consider cutting output by more than 1 million barrels a day for its biggest reduction since the pandemic at a meeting on Oct. 5.

The economic environment for risk assets is deteriorating against the backdrop of aggressive policy tightening, rising real yields, Europe's energy woes, and China's ongoing property market stress and COVID lockdowns, Credit Suisse said in a report.

Asian markets were broadly lower in thin holiday trade, with Hong Kong's Hang Seng index touching its lowest level in 11 years.

Japanese shares were rising, led by gains in chip-related stocks and energy shares.

Japan stands ready to take "decisive" steps in the foreign exchange market if excessive yen moves persist, Finance Minister Shunichi Suzuki said as the yen weakened past 145 per dollar.

Gold edged up slightly on dollar weakness ahead of key U.S. jobs, manufacturing and service sector activity data due this week.

In remarks prepared for a speech in New York on Friday, Fed Vice Chair Lael Brainard warned that the risk of additional inflationary shocks cannot be ruled out and that monetary policy will need to be restrictive for some time.

Final manufacturing Purchasing Managers' survey results from the euro area and the U.K. are due later in the session.

U.S. stocks fell in choppy trading on Friday to notch their longest streak of quarterly losses since the market collapse of 2008, as sportswear maker Nike warned of a margin squeeze and new data closely watched by the Federal Reserve showed that prices continued to rise at a rapid pace in August.

The Dow lost 1.7 percent while the S&P 500 and the tech-heavy Nasdaq Composite both shed around 1.5 percent.

European stocks closed higher on Friday as government bond yields eased and revised data showed Britain is not yet in recession.

The pan European Stoxx 600 rallied 1.3 percent but posted sharp losses for the month and the third quarter.

The German DAX climbed 1.2 percent and France's CAC 40 index surged 1.5 percent while the U.K.'s FTSE 100 edged up 0.2 percent.

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