European Shares Seen Subdued Amid Fed Worries

European stocks are set to open on a cautious note Monday as investors await more economic data and comments from central bank officials for clues about when both tapering and rate hikes might happen.

The dollar held near multi-month highs against other major currencies as investors mull the implications of a surprise hawkish shift last week by the U.S. Federal Reserve.

Investors look forward to the comments from several Fed officials this week, including Chair Jerome Powell, who testifies before Congress on Tuesday.

This week’s trading in the U.S. may also be impacted by reaction to reports on new and existing home sales, durable goods orders and personal income and spending.

ECB President Christine Lagarde will address the European Parliament later in the day.

Gold edged up as benchmark U.S. Treasury yields fell to their lowest since March 3, reducing the opportunity cost of holding bullion.

Oil climbed above $72 a barrel after reports that producer group OPEC expects limited U.S. oil output growth this year.

Bitcoin extended its decline below USD 36,500 amid the focus on Chinese mine closures and potential regulatory scrutiny.

Fabio Panetta, an executive board member at the European Central Bank, stated that cryptocurrencies such as Bitcoin are “very dangerous animals” and that the digital euro would help combat the spread of other digital assets created by other countries and companies.

Asian markets started the week sharply lower as traders brought forward expectations for when the Federal Reserve will start tapering its asset purchases.

U.S. stocks fell sharply on Friday as St. Louis Federal Reserve President Jim Bullard offered a fresh dose of hawkishness, saying he sees an initial interest rate increase happening in 2022.

The Dow fell 1.6 percent to extend losses for the fifth day running and reach its lowest closing level in over two months, while the S&P 500 tumbled 1.3 percent and the tech-heavy Nasdaq Composite shed 0.9 percent.

European stocks tumbled on Friday, with a hawkish policy outlook from the U.S. Federal Reserve and signs of policy tightening in China weighing on markets.

The pan European Stoxx 600 lost 1.6 percent. The German DAX gave up 1.8 percent, France’s CAC 40 index declined 1.5 percent and the U.K.’s FTSE 100 fell 1.9 percent.