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European Shares Set For Muted Open

stockmarkets dec17 24jun21 lt

European stocks may open higher on Thursday despite two Fed officials predicting that a period of high inflation in the U.S. may last longer than expected.

Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman both said that "temporary" inflation may take longer than anticipated to fade.

Dallas Fed President Robert Kaplan, who has penciled in an interest-rate increase next year, said in an interview with Bloomberg News that the economy will likely meet the Fed's threshold for tapering asset purchases sooner rather than later.

Asian markets struggled for direction after the WHO warned that the Delta variant of the coronavirus now reported in 85 countries is expected to become a "dominant lineage".

Investor focus also shifted back to U.S.-China relations after the Biden administration ordered a ban on U.S. imports of a key solar panel material from a Chinese company over alleged human rights abuses.

The U.S. Commerce Department separately restricted exports to Hoshine, three other Chinese companies and the paramilitary Xinjiang Production and Construction Corps (XPCC).

Gold edged lower as the dollar inched up to a near 11-week high in the wake of conflicting signals from Federal Reserve officials on rate hikes.

The benchmark 10-year U.S. Treasury yield held below 1.50 percent and Bitcoin traded at around $33,500, while oil traded above $73 a barrel on data showing a sharp drawdown in U.S. crude and gasoline stocks.

Germany's IFO business report will be released later in the day and stronger numbers are anticipated.

The Bank of England is expected to keep stimulus unchanged later today, but investors will be looking out for hints at tightening next year.

Across the Atlantic, trading may be impacted by reaction to the latest U.S. economic data, including reports on initial jobless claims and durable goods orders.

U.S. stocks ended little changed in a quiet session overnight after strong manufacturing data and reassurances from U.S. Federal Reserve Chair Jerome Powell that inflation pressures will be transitory.

The tech-heavy Nasdaq Composite edged up 0.1 percent to a new record closing high while the Dow slipped 0.2 percent and the S&P 500 eased 0.1 percent.

European stocks ended Wednesday's session lower as inflation worries overshadowed encouraging euro zone economic data.

The pan European Stoxx 600 dropped 0.7 percent. The German DAX lost 1.2 percent, France's CAC 40 index shed 0.9 percent and the U.K.'s FTSE 100 slipped 0.2 percent.

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