European Shares Seen Opening Up In Quiet Trade

European stocks are likely to open higher on Wednesday after a strong session on Wall Street overnight, helped by gains in financials and tech stocks.

Asian markets followed Wall Street higher and bond yields reached pre-pandemic highs, while the dollar edged lower ahead of Thursday’s U.S. January inflation print expected to show inflation accelerated to a four-decade high of 7.3 percent.

A stronger reading may boost chances of a 50 bps rate hike in March 2022.

Oil prices rose after two days of declines, as bullish API data outweighed optimism around the resumption of U.S.-Iran nuclear deal talks.

Gold held near a two-week high amid inflation concerns and heightened geopolitical tensions between Russia and Ukraine.

Following talks with his Russian and Ukrainian counterparts, French President Emmanuel Macron said that there are concrete, practical solutions to lower the tension, but any resolution of the Ukraine crisis may yet take ‘weeks and months’.

In economic releases, Destatis is scheduled to issue Germany’s foreign trade data for December later in the day. Exports are forecast to fall 0.2 percent month-on-month and imports to decline 1.5 percent.

Across the Atlantic, trading may be impacted by reaction to the latest earnings news amid a relatively quiet day on the economic front.

U.S. stocks rose overnight as tech stocks such as Apple, Microsoft and Amazon posted strong gains and a jump in Treasury yields lifted banking stocks ahead of the key inflation reading.

The Dow rallied 1.1 percent, the Nasdaq Composite climbed 1.3 percent and the S&P 500 added 0.8 percent.

European stocks ended flat to slightly higher on Tuesday, with quarterly earnings updates, diplomatic efforts to defuse the tensions around Ukraine and comments from ECB President Christine Lagarde emphasizing on being gradual and sequenced in policy adjustment providing some direction.

The pan European Stoxx Europe 600 ended flat with a positive bias. The German DAX inched up 0.2 percent and France’s CAC 40 index edged up 0.3 percent while the U.K.’s FTSE 100 finished marginally lower.