European Shares Seen Higher At Open

European stocks are likely to open higher on Monday as investors ponder whether tech stocks can keep supporting their lofty valuations and heavy AI spending may translate into profits as quickly as once expected.

A host of economic data, including U.S. reports on employment, consumer price inflation and retail sales will also be in the spotlight this week.

These reports, delayed by the government shutdown, will shed additional light on the economic and rate outlook.

Among the central bank decisions due this week, the Bank of Japan is expected to raise rates by 25 basis points, while the Bank of England is poised to cut its benchmark interest rate by another quarter point.

The European Central Bank is expected to keep interest rates on hold, alongside Sweden’s Riksbank and Norway’s Norges Bank.

Asian markets were mostly lower as investors reduced exposure to tech stocks on doubts over the AI rally.

China Vanke failed to get approval from bondholders to extend repayment obligation by one year for an onshore bond, raising fresh concerns over credit risk in the country’s property sector.

China’s November retail sales missed estimates, investment and industrial output growth fell short of expectations, and falling housing prices showed no signs of slowing down, suggesting the country’s economic recovery is losing momentum.

The dollar nursed losses in Asian trade while gold climbed for a fifth day running amid the prospect of interest rate cuts by the Federal Reserve next year.

Oil edged higher after Imperial Oil issued a fire alert at its 120000 barrel-per-day refinery facility in Ontario, Canada, and Ukrainian forces targeted the Afipsky oil refinery in Russia’s Krasnodar region, causing significant damage.

Meanwhile, U.S. special envoy Steve Witkoff said “a lot of progress was made” at talks on Sunday in Berlin to end the Ukraine war.

U.S. stocks ended deep in the red on Friday as investors continued to book profits from high-flying names linked to the artificial intelligence trade on valuation concerns.

Higher Treasury yields also dented sentiment after Chicago Federal Reserve President Austan Goolsbee said he is uneasy about “too heavily front-loading rate cuts and just assuming that inflation will be transitory.”

The tech-heavy Nasdaq Composite plunged 1.7 percent amid a broader rotation from tech to value names. The S&P 500 lost 1.1 percent and the Dow dipped half a percent.

European stocks ended lower on Friday, failing to hold on to early gains after warnings by NATO Secretary General Mark Rutte that Europe must be prepared for war with Russia.

The pan-European Stoxx 600 gave up half a percent. The German DAX dropped half a percent, France’s CAC 40 eased 0.2 percent and the U.K.’s FTSE 100 shed 0.6 percent.

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