European Shares Seen Flat To Lower With US Debt Talks In Focus

European stocks may open on a sluggish note Friday as investors fret about slowing economic growth and worsening ties between Washington and Beijing.

China is bracing for a massive wave of coronavirus cases from XBB variants.

Sino-U.S. tensions remain in focus after the U.S. State Department warned that China was capable of launching cyber-attacks against critical infrastructure, including oil and gas pipelines and rail systems.

Asian markets traded mostly higher, with Japan’s Nikkei trading just below 33-year year highs as an upbeat outlook from Nvidia helped lift shares of chipmakers and data showed core inflation in Tokyo slowed in May.

U.S. debt ceiling talks continue, with Reuters reporting that President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal that would raise the government’s $31.4 trillion debt ceiling for two years while capping spending on most items.

The dollar eased but was on track for a third weekly gain on expectations that U.S. interest rates could remain higher for longer than initially expected.

Gold edged up while oil extended steep losses from the previous session amid conflicting messages from Russia and Saudi Arabia ahead of the next OPEC+ policy meeting.

Trading later in the day may be impacted by U.S. reports on durable goods orders and consumer sentiment.

Market participants also await a report on personal income and spending, which includes a reading on inflation said to be preferred by the Federal Reserve.

U.S. markets ended broadly higher overnight as a blowout forecast from chipmaker Nvidia offset U.S. debt ceiling and interest-rate worries.

In economic news, Q1 GDP was revised up while weekly jobless claims rose modestly in the week ended May 20th.

The Nasdaq Composite rallied 1.7 percent and the S&P 500 added 0.9 percent while the Dow slipped 0.1 percent.

European stocks fell on Thursday as U.S. debt ceiling worries lingered and data showed the German economy was in recession in early 2023.

The pan European STOXX 600 dropped 0.3 percent. The German DAX and France’s CAC 40 both eased around 0.3 percent while the U.K.’s FTSE 100 shed 0.7 percent.

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