European stocks are seen opening on a cautious note Tuesday as a steep jump in daily Covid-19 infections in China raised concerns over supply chain disruptions.
Companies from Apple supplier Foxconn to automakers Toyota and Volkswagen suspended some operations as multiple Chinese cities and provinces tightened restrictions in line with Beijing’s zero-tolerance goal of suppressing contagion as quickly as possible.
Concerns about China’s economic outlook sent oil prices down about 5 percent in Asian trade and the dollar index eased slightly, while gold held a drop on rising yields ahead of the Federal Reserve’s monetary policy announcement on Wednesday.
The U.S. central bank is widely expected to raise interest rates by 25 basis points and may continue raising rates over the comings months in an effort to combat elevated inflation.
Asian markets were broadly lower as peace talks between Russia and Ukraine ended Monday without a breakthrough, with an aide to Ukrainian President Volodymyr Zelenskyy saying the negotiators took “a technical pause.” The negotiators plan to meet later today.
In another development, the European Union has announced that the 27-nation bloc has approved a new set of sanctions to punish Moscow for its invasion of Ukraine.
Investors ignored data showing that China’s retail sales and industrial production grew more than expected in January to February period.
U.S. stocks ended mostly lower overnight as Treasury yields spiked ahead of an expected hike in interest rates.
The tech-heavy Nasdaq Composite plunged 2 percent to hit its lowest closing level in over a year and the S&P 500 shed 0.7 percent while the Dow ended flat after climbing as much as 450 points in early trade.
European stocks rallied on Monday as a sharp fall in crude oil prices helped ease inflation concerns.
The pan European Stoxx 600 climbed 1.2 percent. The German DAX surged 2.2 percent, France’s CAC 40 index jumped 1.8 percent and the U.K.’s FTSE 100 added half a percent.
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