European Shares Poised For Steady Start
European stocks may open on a firm note Monday, taking cues from last week’s strong rally on Wall Street.
The upside, however, may remain limited as the control of U.S. House of Representatives remains in limbo due to a stronger-than-expected performance by Democrats in the mid-term elections.
Democrats kept control of the Senate on Saturday with the victory of Sen. Catherine Cortez Masto in Nevada while control of the House remains still uncertain, nearly a week after Election Day.
Meanwhile, the dollar index and bond yields edged up while gold retreated from a 2-1/2 month high on hawkish Fed comments.
The U.S. Federal Reserve may consider slowing the pace of rate increases at its next meeting but the “end point” of rate increases is likely still “a ways off,” Federal Reserve Governor Christopher Waller said on Sunday.
Waller also said that financial markets may have overreacted to the softer-than-expected October inflation print.
Copper prices held near a five-month high and oil traded slightly higher to extend Friday’s rally despite Chinese cities including Beijing reporting record COVID cases on Sunday.
Crypto currencies remained under pressure, with Bitcoin tumbling below $16,000 amid the persisting crypto market turbulence sparked by the implosion at the digital asset exchange FTX.
Asian stocks traded mixed, with Chinese and Hong Kong markets rising, after financial regulators in China issued a 16-point plan to boost the real estate market.
U.S. President Joe Biden and Chinese President Xi Jinping will meet today in Indonesia’s Bali on the sidelines of the G20 Summit, with the focus likely to be on developing a better understanding of each other’s priorities and quash misconceptions about one another.
In economic releases, industrial production data from the euro area is due later in the day, headlining a light day for the European economic news.
Across the Atlantic, this week’s economic calendar includes reports on producer prices, import and export prices, retail sales, industrial production, housing starts and existing home sales.
U.S. stocks saw further upside on Friday amid optimism over easing inflation and hopes the Federal Reserve would soon slow its tightening campaign.
The S&P 500 rose 0.9 percent to close out its best week since June and the tech-heavy Nasdaq Composite climbed 1.9 percent to score its biggest weekly gain since March, while the Dow ended flat with a positive bias after steep declines in Merck and UnitedHealth shares.
For the week, the Nasdaq skyrocketed 8.1 percent, the S&P 500 soared 5.9 percent and the Dow jumped 4.2 percent.
European stocks finished broadly higher on Friday as bond yields eased and China loosened some COVID-restrictions.
The pan European STOXX 600 finished marginally higher. The German DAX and France’s CAC 40 index both gained around 0.6 percent while the U.K.’s FTSE 100 shed 0.8 percent.
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