European Shares Set To Extend Losses On Risk Aversion

European stocks look set to extend recent losses on Tuesday as renewed worries about interest rate rises and an escalation in the Ukraine war sapped investors’ appetite for riskier assets.

Risk aversion gripped global markets amid renewed Russian attacks on Ukraine cities and the U.S. decision to send more military aid to Ukraine.

Concerns persist about the U.K.’s fiscal and inflation outlook, notwithstanding a flurry of announcements designed to calm U.K. debt markets.

Chip-related stocks are tumbling in Japan, South Korea, Taiwan, China and Hong Kong in the wake of U.S. export curbs aimed to cut China off from certain semiconductor chips made anywhere in the world with U.S. equipment.

The U.S. dollar hit multi-year highs and U.S. Treasury yields climbed, while gold extended losses for a fifth day after Chicago Fed president Charles Evans said there is a strong consensus at the Federal Reserve to raise the target policy rate to around 4.5 percent by February and hold it there for most of 2023.

Separately, Fed Vice Chair Lael Brainard laid out a case for exercising caution, saying that previous rate increases were starting to slow the economy and the full brunt of tighter policy would not be felt for months to come.

Oil prices inched lower in Asian trade after falling nearly 2 percent in the U.S. trading session on demand concerns.

Labour market statistics from the U.K. is due later in the session, headlining a light day for the European economic news.

Overnight, U.S. stocks closed lower for a fourth straight session as concerns over aggressive monetary policy tightening and increased geopolitical risks lifted the dollar gauge to the highest level this month.

The Dow slipped 0.3 percent, the S&P 500 shed 0.8 percent and the tech-heavy Nasdaq Composite fell 1 percent.

European stocks also extended losses for a fourth day running on Monday amid heightened geopolitical tensions and news of fresh lockdowns in China.

The pan European Stoxx 600 eased 0.4 percent. The German DAX finished marginally lower while France’s CAC 40 index and the U.K.’s FTSE 100 both fell around half a percent.

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