European Shares Set To Fall As Earnings Concerns Resurface

European stocks are likely to open on a sluggish note Tuesday after Snapchat owner Snap Inc. issued a profit warning and announced plans to slow hiring and spending, reviving fears of recession and inflation hurting corporate earnings.

As worries of runaway inflation mount, investors now await a speech by Fed Chair Jerome Powell due later in the day and the latest FOMC minutes scheduled for Wednesday for further clues with regards to growth and the future of monetary tightening in the world’s largest economy.

Manufacturing surveys from Europe and the U.S. due later in the day are expected to reveal some slowing.

Asian markets fell on concerns about China’s zero-COVID policy and prolonged lockdowns.

Investment banks UBS Group and JPMorgan Chase downgraded their forecasts for China’s economic growth this year, citing disappointing April activity data and the impact of the coronavirus strategy.

Benchmark indexes in mainland China, Hong Kong and South Korea were down over 1 percent despite China announcing a fresh raft of measures to support businesses and aid demand.

Gold ticked higher on a weaker dollar while oil prices eased in Asian trade on demand worries. U.S. Treasury yields eased, but the 10-year yield remained above 2.8 percent.

U.S. stocks ended Monday’s session on more solid footing after President Joe Biden said he was considering easing tariffs on Chinese goods.

The Dow rallied 2 percent, the tech-heavy Nasdaq Composite climbed 1.6 percent and the S&P 500 surged 1.9 percent.

European stocks closed higher on Monday despite ECB Christine Lagarde signaling the end of negative interest rates.

The pan European Stoxx 600 jumped 1.3 percent. The German DAX rose 1.4 percent, France’s CAC 40 index gained 1.2 percent and the U.K.’s FTSE 100 advanced 1.7 percent.

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