European Shares Seen Flat To Slightly Lower With Focus On US Inflation

European stocks may open broadly lower on Tuesday as investors await the all-important U.S. consumer price inflation report later in the day, which could impact the outlook for interest rates.

U.S. consumer prices are expected to show a monthly increase in January, although the annual rate of growth is expected to slow to 6.2 percent from 6.5 percent in the previous month.

A hotter-than-expected reading might force the Fed into a more aggressive posture.
Options trades show some investors are anticipating a peak rate of 6 percent by September.

Speeches from three top Fed officials and the release of euro area employment and revised gross domestic product data covering the last quarter of 2022 may also sway sentiment as the day progresses.

Meanwhile, U.S.-China tensions eased somewhat after reports suggested that U.S. Secretary of State Antony Blinken is considering a meeting with top Chinese diplomat Wang Yi at a security conference later this week.

Asian markets gave up some early gains to trade on a mixed note, while the Japanese yen recouped losses after the government officially nominated economics professor Kazuo Ueda to become the next Bank of Japan Governor.

Gold edged up slightly while oil prices fell more than 1 percent after the U.S. government said it will release more crude from its Strategic Petroleum Reserve.

U.S. stocks rose sharply overnight after closing out their worst weekly performance of 2023 on Friday.

The Dow and the S&P 500 both climbed around 1.1 percent while the tech-heavy Nasdaq Composite rallied 1.5 percent despite lingering worries about the outlook for inflation and interest rates.

European stocks advanced on Monday after the European Commission marked up its economic growth forecast for the bloc this year to narrowly avoid a recession.

The pan-European STOXX 600 gained 0.9 percent. The German DAX rose 0.6 percent, France’s CAC 40 index added 1.1 percent and the U.K.’s FTSE 100 inched up 0.8 percent.

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