European stocks may open on a subdued note Friday as investors reassess bets on how high the Federal Reserve will raise rates to bring inflation down to target over time. An overnight spike in U.S. Treasury yields also raised fears of a looming recession.
Asian stocks traded broadly lower as Chinese inflation data came in lower than expected and Australian’s central bank hinted at further interest rate hikes, citing high inflation.
China’s consumer price inflation grew less than expected in January, while producer prices fell further during the month, painting a somewhat mixed picture of the world’s second-largest economy.
The Reserve Bank of Australia boosted its forecast for core inflation and wages growth this year, and flagged further increases in interest rates.
The dollar index edged higher on increased risk aversion, pushing oil and gold prices lower in Asian trading.
A preliminary report on U.S. consumer sentiment, which includes readings on inflation expectations, may sway sentiment as the day progresses.
U.S. and British inflation readings, U.S. retail sales and industrial production data, and Japan GDP figures are due to be unveiled next week.
U.S. stocks declined overnight as hawkish comments by some Federal Reserve officials and an inversion of the U.S. Treasury bond yield curve stoked recession fears.
The Dow shed 0.7 percent, the tech-heavy Nasdaq Composite lost 1 percent and the S&P 500 gave up 0.9 percent amid increased bets for the Fed to hike its policy rate to 6 percent by September.
European stocks closed higher for a third consecutive session on Thursday on the back of some encouraging earnings updates and data showing a slowdown in German inflation.
The pan European STOXX 600 gained 0.6 percent. The German DAX rose 0.7 percent, France’s CAC 40 index rallied 1 percent and the U.K.’s FTSE 100 edged up 0.3 percent.
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