European Shares Likely To See Tepid Start As Recession Fears Weigh

stockmarkets aug16 08dec22 lt

European stocks are seen opening flat to slightly lower on Thursday as recession worries mount.

The U.S. dollar extended overnight losses, tracking falling U.S. Treasury yields on expectations that the Federal Reserve will step down the pace of its rate hikes to 50 bps next week.

Long-term U.S. Treasury yields fell further in Asian trade, after having plummeted to an almost three-month low overnight.

Investors also watched the latest political developments after Democratic Senator Raphael Warnock defeated Republican challenger Herschel Walker in a Georgia runoff election, helping expand the Senate majority of the U.S. Democrats.

Asian markets traded mixed, with Hong Kong stocks rallying, a day after China announced its biggest yet relaxation of COVID restrictions.

China's yuan held near an almost three-month high while gold steadied after climbing more than 1 percent in the previous session.

Oil rose about 1 percent in Asian trade after reaching its lowest level this year on Wednesday amid concerns about fuel demand.

A report on weekly jobless claims may attract some attention today, although trading may be somewhat subdued ahead of Friday's reports on producer price inflation and consumer sentiment.

The University of Michigan's preliminary report on consumer sentiment includes readings on inflation expectations that could impact the outlook for interest rates.

Closer home, a speech by ECB President Christine Lagarde may provide additional cues on the path of rate hikes ahead of the official ECB policy meeting next week.

U.S. stocks closed mostly lower overnight as investors pondered the outlook for interest rates and the economy.

The S&P 500 slipped 0.2 percent to extend losses for the fifth straight session and the tech-heavy Nasdaq Composite dropped half a percent while the Dow ended flat with a positive bias.

European stocks fell for a fourth day running on Wednesday, with fears about a possible U.S. recession as well as dismal trade data from China weighing on sentiment.

The pan European STOXX 600 gave up 0.6 percent. The German DAX declined 0.6 percent, while France's CAC 40 index and the U.K.'s FTSE 100 both dipped around 0.4 percent.

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