European Shares Seen Opening Lower As Bond Yields Climb

European stocks may open lower on Wednesday as Treasury yields extended an advance amid worries over inflation and higher interest rates.

As global energy prices reach new highs, it is feared that rising inflationary pressures may force central banks to tighten policy sooner than expected.

The Reserve Bank of New Zealand raised interest rates for the first time in seven years earlier today and hinted that there could be more such rate hikes in the coming months to contain the risk of the economy overheating and inflation surging further.

The 10-year Treasury yield and the 30-year yield both reached the highest since June and the dollar hovered close to its highs for the year, as traders await U.S. jobs data this week for clues about the Fed policy outlook.

Asian markets fell broadly as inflation worries, concerns about China’s highly-leveraged property sector and U.S. political gridlock over the nation’s debt ceiling and President Joe Biden’s wider economic agenda contributed to the uncertainty.

Crude oil steadied near a seven-year high and Bitcoin held a climb past the $51,000 mark while gold edged lower on dollar strength.

In economic releases, Destatis is slated to issue German factory orders data for August later in the day. Economists expect orders to fall 2.1 percent month-on- month, reversing a 3.4 percent rise in July.

Eurostat publishes Eurozone retail sales data for August. Sales are forecast to advance 0.8 percent sequentially, in contrast to the 2.3 percent decline posted in July.

U.S. stocks rose overnight as a measure of services industry activity rose in September despite supply chain troubles and a key lawmaker said the Senate will vote on Wednesday on a Democratic-backed measure to suspend the U.S. debt ceiling.

The Dow gained 0.9 percent, the tech-heavy Nasdaq Composite rallied 1.3 percent and the S&P 500 added 1.1 percent.

European stocks also closed higher on Tuesday after a survey showed business growth across Europe remained strong last month despite shortages of inputs.

The pan European Stoxx 600 advanced 1.2 percent. The German DAX gained 1.1 percent, France’s CAC 40 index surged 1.5 percent and the U.K.’s FTSE 100 rose 0.9 percent.

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