European Shares Seen Opening On Firm Footing

European stocks may open higher on Wednesday after U.S. Treasury Secretary Janet Yellen clarified she is not predicting Fed rate increases to rein in any inflation spurred by President Joe Biden’s proposed spending.

Yellen said in remarks webcast during The Atlantic’s Future Economy Summit early on Tuesday that interest rates may need to rise slightly to keep the economy from overheating.

Asian stocks are trading mixed in thin trading, with markets in Japan, China and South Korea shut for holidays.

Gold edged up on a weaker dollar, while oil prices extended overnight gains after industry data showed U.S. crude stockpiles fell much more than expected last week.

Private sector PMIs from the euro zone are due later in the session. Investors also await a speech from the European Central Bank’s (ECB) Philip Lane, a member of the bank’s executive board.

The Bank of England will publish its latest rate decision on Thursday alongside updated economic forecasts.

Across the Atlantic, trading may be impacted by reaction to reports on private sector employment and service sector activity.

Chicago Fed President Charles Evans gives a virtual speech at an event hosted by Bard College, while Cleveland Fed President Loretta Mester gives a virtual speech to the Boston Economic Club.

U.S. stocks fell broadly overnight after Yellen suggested interest rates may have to rise modestly to prevent the economy from overheating amid the recent spike in government spending.

The tech-heavy Nasdaq Composite fell as much as 1.9 percent and the S&P 500 shed 0.7 percent while the Dow reversed an early slide to finish marginally higher.

European stocks tumbled on Tuesday amid inflation concerns and worries about valuations as coronavirus cases continued to surge in several countries.

The pan European Stoxx 600 lost 1.4 percent. The German DAX plummeted 2.5 percent, while France’s CAC 40 index gave up 0.9 percent and the U.K.’s FTSE 100 dropped 0.7 percent.

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