European Shares May See Soft Start As Energy Crisis Deepens

European stocks may open on a tepid note Tuesday, with ongoing energy crisis and Italian political uncertainty likely to weigh on sentiment.

Tech stocks could be in focus after IBM reduced its cash flow forecast, citing the strength of the dollar and the loss of highly-profitable Russia business.

As Russia restricts supplies, Europe needs to drastically slash natural gas consumption in the next three months to prepare for what is likely to be “a long, hard winter,” the International Energy Agency has warned in a statement.

Meanwhile, Italian Prime Minister Mario Draghi is due to announce whether he will stick with his resignation decision. It is likely that there will be a confidence vote after his speech in Parliament on Wednesday.

Asian markets were subdued amid inflation worries and a deteriorating outlook for corporate earnings.

The downside remained capped somewhat after China’s central bank stepped up cash injections through open market operations amid rising threats to the financial system.

Gold held steady near 11-month lows and the dollar index was little changed while oil took a breather after rallying more than 5 percent on Monday, helped by a plunging dollar and signs of tight supplies.

In economic releases, unemployment figures from the U.K. and revised consumer price data from Eurozone are due later in the session.

U.S. stocks reversed course to end firmly in the red overnight, as a measure of homebuilder confidence plunged in July and reports emerged that Apple plans to slow hiring and spending growth ahead of a potential recession.

The Dow ended 0.7 percent lower, while the tech-heavy Nasdaq Composite and the S&P 500 both shed around 0.8 percent.

European stocks ended well off their day’s highs on Monday after Russia’s Gazprom told European buyers it cannot guarantee gas supplies because of “extraordinary” circumstances.

The pan European Stoxx 600 climbed 0.9 percent. The German DAX rose 0.7 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 both gained around 0.9 percent.

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