European Shares To Open On Soft Note As US Economic Concerns Mount

(RTTNews) - European stocks look set to open lower on Friday, with AI bubble concerns, escalating global trade disputes and heightened concerns about the U.S. credit market likely to weigh on markets, heading into the weekend.

The U.S. government shutdown persists as the Senate rejected the House's spending patch for the tenth time.

The shutdown is now well into its third week with no signs that the Democratic minority in the U.S. Senate plans to back down from demands for health insurance subsidies being included.

Meanwhile, ahead of the Communist Party's fourth plenary session next week, China accused the U.S. of creating "unnecessary panic" over Beijing's controls on rare earth exports.

After reports emerged that the U.S. is considering imposing sweeping tariffs of up to 500 percent on Chinese imports over Russian oil trade, Beijing defended its oil imports from Russia as "legitimate and lawful" and warned that it would take "firm countermeasures" if the U.S. imposed unilateral sanctions affecting Beijing's interests.

In another significant development, a Bloomberg report suggested that the White House is preparing to ease tariffs on the U.S. auto industry, with an announcement in this regard expected later in the day.

Asian markets were mostly lower, with mainland China, Hong Kong and Japanese markets leading regional losses amid escalating Sino-U.S. tensions and renewed concerns about the U.S. banking sector.

The dollar index was set for its worst week since late July, two-year U.S. Treasury yield fell to the lowest level since 2022 and the 10-year yield dipped below 4 percent as signs of weakness in the U.S. economy supported the case for more rate cuts.

Federal Reserve Governor Christopher Waller said Thursday the central bank should keep lowering rates in quarter-percentage-point increments to support a faltering labor market.

Stephen Miran also advocated a larger reduction, repeating his push for a half-percentage-point interest rate cut when the central bank meets later this month.

As the U.S. economy navigates a period of significant uncertainty, markets currently expect the Fed to deliver two more interest rate cuts this year.

Oil extended overnight losses and was on course for a third weekly decline due to mounting concerns over a significant supply glut in the oil market and ongoing U.S.-China tensions.

Gold extended a record-breaking rally, climbing nearly 1 percent to $4370 an ounce and eyeing its best weekly performance in 17 years as a result of fears about credit quality in the U.S. economy, heightened U.S.-China frictions, concerns about the U.S. government shutdown and fears of an AI bubble.

Overnight, U.S. stocks ended firmly in the red after regional banks Zions Bancorporation and Western Alliance both disclosed problems with loans, adding to concerns over credit stress following the bankruptcies of two automotive-related companies First Brands and Tricolor Holdings.

Sentiment was also dented by heightened U.S.-China trade frictions and data showing manufacturing activity in the Philadelphia region contracted sharply in October. The Dow dipped 0.7 percent, the S&P 500 shed 0.6 percent and the tech-heavy Nasdaq Composite declined half a percent.

European stocks closed higher on Thursday after the French government survived a confidence vote.

The pan-European Stoxx 600 gained 0.7 percent. The German DAX rose 0.4 percent, the U.K.'s FTSE 100 inched up 0.1 percent and France's CAC 40 surged 1.4 percent.