European Shares Seen Lower As Investors Brace For US Inflation Data

European stocks may open lower on Monday as investors brace for key U.S. data this week for additional clarity on the Fed’s rate trajectory.

The U.S. consumer and producer price inflation data will likely be in the spotlight this week, along with other reports on retail sales, industrial production and consumer sentiment.

Currently, markets are pricing in three to four quarter-point (25 bps) U.S. rate cuts, with a 75 percent chance for the first in June.

Asian markets traded mixed, with Japan’s Nikkei average tumbling nearly 3 percent as the yen extended recent gains against the dollar on hawkish BOJ talk.

Japan’s Q4 GDP was revised up to show slightly expansion, fueling bets the Bank of Japan will end negative interest rates at its upcoming meeting next week.

Chinese and Hong Kong markets traded higher after data showed consumer prices in the country rose for the first time in six months in February, helping ease concerns that deflation may become more entrenched.

However, producer prices continued to fall in the month, remaining in the negative territory for the 17th consecutive month.

The dollar index extended losses while gold scaled a fresh record peak to trade above $2,180 per ounce on expectations that U.S. inflation data due Tuesday will show a further slowing in core prices.

Oil prices edged lower in Asian trading ahead of reports from OPEC and the IEA this week that may provide clues on the demand outlook.

U.S. stocks closed lower on Friday as February jobs data offered conflicting signals on the economic and rate outlook.

The report showed stronger-than-expected jobs creation, un uptick in the unemployment rate to 3.9 percent, cooler wage growth and notable downward revisions to job growth in the previous two months.

Non-farm payroll employment surged by 275,000 jobs in February, while economists had expected an increase of 200,000 jobs.

The numbers for December and January were revised downward by a total of 167,000.
The tech-heavy Nasdaq Composite lost 1.2 percent, the S&P 500 gave up 0.7 percent and the Dow eased 0.2 percent.

European stocks ended mixed on Friday as data showed Eurozone GDP was little changed at the end of 2023.

The pan European STOXX 600 ended flat with a positive bias. The German DAX slipped 0.2 percent and the U.K.’s FTSE 100 shed 0.4 percent while France’s CAC 40 edged up 0.2 percent.

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