European Shares Set To Open On Lackluster Note

European stocks look set to open on a flat note Thursday as investors fret over tight liquidity conditions in China and watch for progress in U.S. stimulus talks.

Asian markets are trading mostly lower as China’s short-term interest rates rose again, raising worries over signs of liquidity tension ahead of the upcoming Lunar New Year holiday.

Gold edged lower while the dollar hovered close to a two-month peak it hit on Wednesday as investors looked ahead to the passage of a U.S. stimulus package and the Bank of England’s interest rate decision.

Oil prices edged higher after the OPEC+ alliance of major producers stuck to a reduced output policy.

U.S. President Joe Biden and congressional Democrats are barreling ahead with plans to pass a $1.9tn economic relief plan without Republican support.

“We hope that our Republican colleagues will join us in offering amendments,” Senate Majority Leader Chuck Schumer said in a speech.

The Bank of England is not expected to change interest rates or quantitative easing at its meeting today, with much of the focus likely to be on the Bank’s findings of its review into the effectiveness of a negative interest rate policy.

U.S. Treasury Secretary Janet Yellen will meet with U.S. financial regulators today to discuss recent volatility in financial markets.

The U.S. employment report for January will hit the markets on Friday, with economists expecting a return to job gains after December’s loss of 123,000 jobs.

Overnight, U.S. stocks ended narrowly mixed as investors reacted to the latest earnings news and upbeat private sector employment and service sector activity data, which raised concerns lawmakers will feel less pressure to provide additional stimulus.

European stocks ended mostly higher on Wednesday as investors watched progress in vaccination programs and political developments in Italy.

The pan European Stoxx 600 gained 0.3 percent. The German DAX rose 0.7 percent, while France’s CAC 40 finished marginally lower and the U.K.’s FTSE 100 slipped 0.1 percent.

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