European shares wobble as rate concerns return

European shares fell at the open on Tuesday as investor concerns re-emerged that interest rates in the eurozone would remain high longer to curb inflation.

Europe’s region-wide Stoxx 600 fell 0.3 percent, snapping its two-day winning streak, while France’s CAC 40 and Germany’s DAX were down 0.3 percent and 0.2 percent, respectively.

The move comes a day after the European Commission raised its forecasts for EU-wide consumer price inflation, which is now expected to reach 6.7 percent this year and 3.1 percent next year, compared to its earlier forecast of 6.4 percent. and was 2.8 percent. St. Related.

Data later on Tuesday will provide insight into the impact of higher rates on economic growth in the eurozone, which is expected to hold steady at 1.3 percent year on year in the first quarter of 2023, according to economists polled by Reuters.

Traders are also awaiting the release of the ZEW survey, a gauge of economic sentiment in Germany, which analysts expect to decline from 4.1 to -5.3 in the month to May.

London’s FTSE 100 lost 0.1 per cent after official data showed Britain’s unemployment rate rose 0.1 percentage points to 3.9 per cent, as the rising cost of living prompted more job-leavers to return to the market.

The pound was trading at $1.249, down 0.2 percent against the dollar.

Meanwhile, Wall Street futures were also down, with contracts tracking the benchmark S&P 500 shedding 0.2 percent, while those tracking the tech-heavy Nasdaq 100 shed 0.1 percent.

US retail sales data for April, coming out later Tuesday, will offer a snapshot on the health of the US consumer amid cooling inflation and higher borrowing costs.

The standoff over the US debt ceiling continued, with President Joe Biden set to meet with Republican House Speaker Kevin McCarthy to discuss the possibility of raising the country’s spending limit before it runs out of money.

The yield on interest rate-sensitive two-year Treasury notes fell 0.02 percentage points to 3.98 percent, while the yield on the 10-year note fell 0.03 percentage points to 3.7 percent. Bond yields rise when prices fall.

Asian equity markets were weighed down, with China’s CSI index down 0.5 percent after a string of official data showed the world’s second-largest economy reopening after a prolonged Covid-19 shutdown. Despite opening, it had failed to gain momentum.

China’s retail sales rose 18.4 percent from the same period last year, while industrial production rose 5.6 percent, official data showed. Both readings were well below expectations of economists polled by Reuters, who had forecast readings of 21 percent and 10.9 percent, respectively.

Hong Kong’s Hang Seng index lost 0.2 percent. Japan’s Topix was the outlier, climbing 0.6 percent to its highest level in nearly 33 years.

Foreign investors have been drawn to Tokyo shares by potential improvements in corporate governance, a return to wage inflation and the perceived stability of the market compared to Chinese stocks affected by geopolitics.