European Shares Set For Subdued Open

European stocks may open on a sluggish note Monday, with China-EU trade concerns and upcoming U.S. inflation data likely to be in focus.

Automakers could be in focus after China and the European Union have agreed to start talks on the bloc’s plans to impose tariffs on electric vehicles imported from the Asian nation.

The dollar steadied near two-month highs and gold edged up on softening Treasury yields as investors await key U.S. inflation data and comments from Federal Reserve officials this week for clarity on the Fed’s rate path.

The U.S. Commerce Department’s report on personal income and spending due later this week includes readings on inflation said to be preferred by the Federal Reserve.

U.S. reports on new home sales, consumer confidence, durable goods orders and pending home sales may also garner investor attention following recent signs that the world’s largest economy may be slowing without falling into recession.

The final GDP data for the first quarter of 2024 is due out Thursday and an upbeat report could put pressure on the Fed to tighten rates further.

Prominent Fed officials speaking this week include San Francisco Fed President Mary Daly and Fed Governors Lisa Cook and Michelle Bowman.

Geopolitically, the focus will be on the first U.S. presidential debate and the beginning of the French election campaign.

Joe Biden will face off Donald Trump in the first U.S. presidential debate on June 27.

According to opinion polls published before the election, the coalition of right-wing parties led by Marine Le Pen of National Rally (RN) party is set to emerge as the single-largest party in French elections to be held in two phases on June 30 and July 7.

The chief data officer of Britain’s Conservative Party has reportedly taken a leave of absence amid growing allegations over bets placed on the date of the general election.

Asian markets fell broadly, though Japan’s Nikkei average rose notably after the country’s top currency official, Masato Kanda, told reporters that officials are ready to intervene to support the yen 24-hours a day, if needed.

Earlier today, a summary of opinions from the Bank of Japan’s June policy meeting revealed discussions among board members about the potential need for a timely increase in interest rates.

Oil prices were subdued in Asian trading, extending declines for a second day running due to pressure from the stronger greenback and renewed worries about prolonged higher interest rates.

U.S. stocks ended narrowly mixed on Friday as semiconductor shares slumped for a second day running and Treasury yields rose on data showing U.S. business activity crept up to a 26-month high in June.

Existing home sales fell for a third straight month in May and the leading indicators for the U.S. economy declined for the third month in a row, separate reports revealed.

The Dow finished marginally higher while the tech-heavy Nasdaq Composite and the S&P 500 both eased by 0.2 percent amid a large options expiry.

European stocks closed lower on Friday as a survey showed Eurozone business recovery slowed sharply in June due to uncertainty over France’s snap election outcome.

The pan European STOXX 600 dropped 0.7 percent. The German DAX dipped half a percent, France’s CAC 40 shed 0.6 percent and the U.K.’s FTSE 100 slid 0.4 percent.