European Shares Set To Follow Wall Street Higher

European stocks are likely to open on a positive note Wednesday after major U.S. indexes snapped two straight days of losses to end sharply higher overnight on the back of strong housing data and a steep drop in oil prices.

The major U.S. averages rose between 1.5 percent and 2.2 percent as earnings optimism helped offset concerns over rising bond yields.

Asian markets traded mixed as sovereign bonds continued a sell-off and China kept its benchmark lending rate steady, disappointing investors looking for a reduction to support growth amid Covid challenges.

Gold dipped on dollar strength while oil prices rose about 1 percent after tumbling more than 5 percent on Tuesday on concerns over the outlook for energy demand in China.

The U.S. dollar climbed to a fresh two-decade peak to the yen as more Fed officials pushed for sizable interest-rate hikes to combat high inflation.

Chicago Fed President Charles Evans warned that interest rates will probably exceed the neutral level and he’s comfortable with two 50 bps hikes this year.

Evans, along with San Francisco Fed President Mary Daly, is due to speak later in the day while Fed Chair Jerome Powell and ECB President Christine Lagarde will speak at an International Monetary Fund event on Thursday. Bank of England Governor Andrew Bailey is due to speak a day later.

A report on existing home sales along with the Federal Reserve’s Beige Book, due out later in the day, could provide additional clues about the outlook for monetary policy.

Closer home, passenger car registrations data from Europe is due later in the session, headlining a light day for the European economic news.

Eurostat is slated to issue eurozone industrial production and external trade figures at 5.00 am ET. Economists expect industrial output to grow 0.7 percent on month in February after staying flat in January.

On the earnings front, IBM topped earnings and revenue estimates while Netflix Inc said inflation, the war in Ukraine and fierce competition contributed to a loss of subscribers for the first time in more than a decade.

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