European Shares Likely To Drift Lower On Rate Worries

stockmarkets aug16 17feb23 lt

European stocks may drift lower at open on Friday as strong U.S. data released overnight coupled with hawkish Fed remarks fueled inflation and rate-hike worries.

Asian markets followed Wall Street lower after two Fed officials warned of additional hikes in borrowing costs to lower inflation back to the central bank's 2 percent target.

Fed President Loretta Mester said there is need for more tightening to tame inflation.

Separately, St. Louis Fed President James Bullard argued that there was a good case for the Fed to have been more aggressive with its recent rate decision.

The dollar jumped to a six-week high on increased risk aversion.

Gold dipped as the benchmark 10-year U.S. Treasury yield climbed to a high of 3.900 percent, marking its highest since Dec. 30 on expectations that U.S. rates may peak just below 5.3 percent by July-end.

Oil prices fell over 1 percent in Asian trading to extend recent losses on signs of sluggish U.S. consumer demand and data showing a big build in stockpiles.

U.S. stocks fell sharply overnight, the dollar advanced and yields ticked up as initial jobless claims data showed a resilient labor market and a key metric showed wholesale prices increased more than expected in January.

The Dow lost 1.3 percent, the tech-heavy Nasdaq Composite shed 1.8 percent and the S&P 500 slipped 1.4 percent.

European stocks finished slightly higher on Thursday despite ECB President Christine Lagarde once again affirming a 50-bps rate hike in March.

The pan-European STOXX 600 gained 0.2 percent. The German DAX and the U.K.'s FTSE 100 index both inched up around 0.2 percent while France's CAC 40 index climbed 0.9 percent.

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