European Shares Poised For Steady Start On China Data

European stocks may open flat to slightly higher on Wednesday as investors cheer signs of expanding manufacturing activity in China.

China’s official manufacturing Purchasing Managers’ Index (PMI) shot up to 52.6 from 50.1 in January, smashing expectations after the country abruptly lifted COVID-19 curbs.

China’s nonmanufacturing activity also grew at a faster pace in February and the private sector index from Caixin/S&P showed factory activity rising for the first time in seven months, helping ease investor fears over rising interest rates.

Asian markets traded mostly higher, with Chinese and Hong Kong markets leading regional gains.

The dollar index weakened slightly, helping gold and oil prices push higher.

Rate fears persist, with investors now looking ahead to the release of U.S. manufacturing as well as the German and the Eurozone February inflation numbers for directional cues.

Fed fund futures pricing currently suggests a peak of around 5.4 percent in the Fed funds rate by September.

The European Central Bank has committed to a further half percentage point increase in its deposit rate at its meeting on March 16.

U.S. stocks ended on a subdued note overnight to log monthly declines amid expectations the Fed will maintain interest rates higher for longer.

In economic releases, consumer confidence declined again in February while Chicago-area business activity unexpectedly contracted at a slightly faster rate in the month, separate reports showed.

The Dow slid 0.7 percent to reach its lowest closing level in well over three months, while the S&P 500 eased 0.3 percent and the tech-heavy Nasdaq Composite edged down 0.1 percent.

European stocks closed mostly lower on Tuesday, as hotter-than-expected inflation figures from France and Spain pointed to more rate increases from the European Central Bank.

The pan-European STOXX 600 declined 0.3 percent. The German DAX inched down 0.1 percent, France’s CAC 40 index slipped 0.4 percent and the U.K.’s FTSE 100 shed 0.7 percent.