European Shares Set For Weak Start

European stocks are likely to open lower on Friday after U.S. President-elect Joe Biden unveiled his $1.9 trillion stimulus plan, which raised optimism for further economic revival but increased inflation expectations.

Investors fear that climbing U.S. yields on expectations of growth revival may spell trouble for bond markets.

Biden also announced details of the American Rescue Plan as deaths from the coronavirus hit record levels and local governments expand lockdowns to stem the pandemic’s spread during the winter months.

Sino-U.S. tensions also remain on investors’ radar after the U.S. government blacklisted Chinese smartphone maker Xiaomi Corp and ten other companies.

Asian stocks are trading mixed amid speculation that Biden may struggle to win support for massive spending, even from some Democrats.

Continuing concerns about the Covid pandemic also weighed on sentiment. German Chancellor Angela Merkel wants a “mega-lockdown” after the country suffered its deadliest-ever day of the coronavirus pandemic on Thursday.

The dollar edged higher in Asian deals while oil held near a 10-month high on hopes of increased fuel demand.

Monthly GDP, industrial production and foreign trade figures from the U.K. are due later in the session, headlining a light day for the European economic news.

Across the Atlantic, trading may be impacted by reaction to a slew of U.S. economic data, including reports on retail sales, industrial production and consumer sentiment.

Earnings news may also sway sentiment, with financial giants Citigroup, JPMorgan Chase and Wells Fargo due to report their quarterly results before the opening bell.

U.S. stocks ended slightly lower overnight as disappointing jobless claims and consumer confidence data offset stimulus hopes.

In wide-ranging remarks, Fed chairman Powell downplayed the risk of higher inflation and talk of the central bank tapering its bond purchases in the near term.

The Dow Jones Industrial Average slipped 0.2 percent, the tech-heavy Nasdaq Composite slid 0.1 percent and the S&P 500 eased 0.4 percent.

European markets advanced for the third straight session on Thursday despite Italy plunging into political crisis.

The pan European Stoxx 600 climbed 0.7 percent. The German DAX rose 0.4 percent, France’s CAC 40 index gained 0.3 percent and the U.K.’s FTSE 100 added 0.8 percent.

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