FX.co ★ European Shares Likely To Open On Tepid Note Amid China Concerns

As we start the week, European stocks are expected to open sluggishly due to investors' growing concerns over China and awaiting clarity concerning the U.S inflation rate, which would help shape the Federal Reserve's rate plan.

Investors remain jittery as uncertainty over China's economic growth heightens. This follows the recent action by Moody's to revoke the credit ratings of 11 Chinese companies for "business reasons".

The progress of the U.S. economy will be in focus this week with multiple economic indicators due for release, including the Fed's most favoured inflation indicator, which could help predict potential rate cuts in the near future.

On Friday, an interview with John Williams, President of the Federal Reserve Bank of New York, suggested that the U.S. central bank is on track to reduce interest rates later this year. Moreover, a speech series by Federal Reserve officials scheduled for this week may offer more insight into the likely timing and magnitude of rate cuts.

Despite most of Asia's markets trading lower, Japan's Nikkei index hit a new record high, extending its rally. Additionally, gold prices are inching upwards, supported by a weakening dollar and escalating geopolitical concerns in the Middle East. In contrast, oil marked its most significant drop in three weeks due to worries about Chinese demand.

U.S. stocks ended last week with mixed results, as cautious statements from Fed officials about hasty interest rate cuts left investors unsure. The Dow Jones Industrial Average increased slightly by 0.2%, and the S&P 500 also achieved a marginal gain, clocking new record closing highs. However, the tech-dominated Nasdaq Composite fell 0.3%.

On the last trading day of the week, European markets mostly ended in the positive, primarily driven by the aspiration of looser monetary policy from the ECB officials and robust earnings from Standard Chartered. The pan-European STOXX 600 gained 0.4%, Germany’s DAX and the UK’s FTSE 100 each rose about 0.3%, while France’s CAC 40 jumped 0.7%.