European Shares May Struggle To Find Footing Amid Economic Uncertainty

(RTTNews) - European stocks may struggle for direction on Thursday, with trading volumes likely to remain thin due to a holiday in the U.S. to honor the death of former President Jimmy Carter.

A cautious undertone may prevail due to uncertainty around the effects of U.S. President-elect Donald Trump's plans, rising inflation risks and concerns over a faltering Chinese economy.

Earlier this week, Trump stated that he intends to impose significant tariffs on certain goods imported from both Mexico and Canada, estimated to be worth hundreds of billions of dollars.

On Wednesday, CNN reported that Trump was mulling a national economic emergency declaration to provide legal justification for a series of universal tariffs on allies and adversaries.

Federal Reserve officials expressed concern about inflation and advocated a slowdown in rate cuts, according to minutes of the Fed's December 17-18 meeting.

Meanwhile, amid global trade pressures, China is facing mounting deflation risks.

Data showed China's consumer inflation rate hit the lowest level in nine months in December and factory deflation extended into a 27th month, testing Beijing's growth strategy.

After the release of conflicting reports on the U.S. labor market, investors are now bracing for Friday's highly anticipated U.S. jobs report that could shed more light on the Federal Reserve's policy outlook.

Closer home, reports on German industrial output, foreign trade and Eurozone retail sales may garner some attention later in the day.

Asian markets were broadly lower, with Japan's Nikkei falling over 1 percent as the yen recovered from multi-month lows on stronger wage growth data.

Oil held losses after falling more than 1 percent on Wednesday. Gold ticked lower while the dollar and Treasuries were steady amid an uncertain inflation and interest-rate outlook.

Fed Governor Christopher Waller said on Wednesday he believes inflation will continue to cool toward the central bank's 2 percent target over the medium term and that further rate reductions will be appropriate.

U.S. stocks ended narrowly mixed overnight after the release of mixed jobs data. The ADP private sector employment report showed fewer jobs were added in December than economists had anticipated.

Separate data revealed that jobless claims for the previous week unexpectedly fell to their lowest level in almost eleven months.

The minutes from the Fed's December meeting revealed that officials expect slower rate cuts in 2025 and remain worried about the inflation impacts from Trump's policies.

The tech-heavy Nasdaq Composite finished marginally lower while the Dow rose 0.3 percent and the S&P 500 added 0.2 percent.

European stocks fell broadly on Wednesday after the release of disappointing Eurozone economic sentiment, German retail sales and factory orders data.

The pan European STOXX 600 eased 0.2 percent. The German DAX edged down marginally and France's CACC 40 shed half a percent while the U.K.'s FTSE 100 ended flat with a positive bias.