European Shares Seen Lower After US Tech Selloff

European stocks are seen opening on a cautious note Friday after technology shares led Wall Street benchmarks lower overnight.

A cautious undertone may prevail as investors weigh the implications of higher interest rates, surging coronavirus cases and heightened tensions between the U.S. and China.

As inflation worries mount, the Bank of Japan said today it would reduce some of its pandemic support measures.

Dr. Anthony Fauci, President Joe Biden’s top medical advisor, said that the U.S. is experiencing a resurgence of the delta variant and that omicron will become the dominant Covid-19 variant in the United States within a few weeks.

The Biden administration said it is imposing new sanctions on several Chinese biotech and surveillance companies and government entities, citing national security and human rights issues.

Meanwhile, the U.S. Senate failed to pass a bill for President Joe Biden’s $2 trillion economic agenda, with action on the tax and spending bill delayed to January 2022.

Asian markets fell broadly in cautious trade while gold edged up amid weakness in the dollar index and data showing rising unemployment claims in the U.S. Oil prices fell over 1 percent in Asian trade after an overnight surge.

It’s a relatively busy day ahead on the Eurozone’s economic calendar, with German wholesale inflation and business sentiment figures as well as finalized Eurozone inflation figures likely to be in focus.

U.S. stocks reversed early gains to end lower overnight as the latest batch of economic data disappointed and worries grew over travel rules to curb omicron’s spread.

The tech-heavy Nasdaq Composite fell as much as 2.5 percent as investors considered the impact of the Fed’s aggressive pace of interest-rate increases. The S&P 500 shed 0.9 percent and the Dow finished marginally lower.

European stocks rallied on Thursday as investors reacted positively to the policy announcements from the Federal Reserve, the European Central Bank and the Bank of England.

The European Central Bank announced a reduction in support for the euro zone economy by another notch but promised copious support for 2022. The bank also indicated that any exit from years of ultra-easy policy will be slow.

The Bank of England raised its key interest by 0.15 percentage points to bring inflation down.

The pan European Stoxx 600 climbed 1.2 percent. The German DAX gained 1 percent, France’s CAC 40 index added 1.1 percent and the U.K.’s FTSE 100 advanced 1.3 percent.

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