European Shares Seen Opening Flat After China’s Yuan Move

European Shares Seen Opening Flat After China’s Yuan Move

European stocks may open largely unchanged on Tuesday despite worries about the Sino-U.S. trade war and political turmoil in Europe.

The trade war between China and the United States may intensify after China allowed its currency to slip past a psychological bulwark.

The International Monetary Fund has lowered its forecast for Chinese economic growth in 2019 to 6.2 percent from 6.4 percent, citing the “negative effect of recent tariff actions”.

Elsewhere in Europe, concerns persist over a budget showdown between Italy and the EU and the impact of Brexit, with the U.K. hinting that a breakthrough in Brexit talks may not be that imminent.

Asian markets are trading mixed on concerns about rising interest rates globally and mounting tensions over trade.

Chinese Foreign Minister Wang Yi has accused the U.S. of constantly escalating the trade dispute with China and harming the communist country’s rights and interests with its support for Taiwan, in a sign of sharply deteriorating relations between the two countries.

Visiting U.S. Secretary of State Mike Pompeo reportedly responded with equal bluntness that the U.S. had fundamental differences with China.

Japan’s Nikkei index fell over 1 percent as traders returned to their desks after a long holiday weekend. Chinese shares recovered from early losses to hold steady while the South Korean markets are closed for a public holiday.

Oil prices firmed up amid increasing signs of declining crude exports from Iran ahead of impending U.S. sanctions on the country.

Foreign trade data from Germany is due later in the session, headlining a light day for the European economic news.

Overnight, U.S. stocks fluctuated before ending mixed, as technology stocks came under selling pressure for the third day running and investors remained concerned about the impact of U.S.-China trade war on global growth.

The Dow rose 0.2 percent while the S&P 500 slid marginally and the tech-heavy Nasdaq Composite fell as much as 0.7 percent.

European markets fell sharply on Monday amid the re-emergence of the Italy/EU budget deficit battle after Italy vowed to ramp up spending.

The pan-European Stoxx Europe 600 index lost 1.1 percent. The German DAX tumbled 1.4 percent, France’s CAC 40 index shed 1.1 percent and the U.K.’s FTSE 100 declined 1.2 percent.

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