BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks are seen opening broadly lower on Tuesday as investors await key U.S. inflation data and corporate earnings in the coming days for direction.
The U.S. Labor Department is scheduled to release its report on consumer price inflation on Wednesday, with the annual rate of consumer price growth expected to accelerate to 3.6 percent in September from 3.4 percent in August.
The producer price index report is scheduled for release on Thursday.
These inflation prints could have a significant impact on the outlook for interest rates ahead of the Federal Reserve's next monetary policy meeting later this month.
CME Group's FedWatch Tool currently indicates a 78.4 percent chance the Fed will leave interest rates unchanged this month after last month's quarter point rate hike. Market watchers are divided on a potential hike in December.
Amid fresh selling in artificial intelligence stocks, investors are also seeking cues from the U.S. earnings season, with financial giants Goldman Sachs Group, Citigroup, JPMorgan Chase, Wells Fargo, Morgan Stanley and Bank of America due to report their quarterly results this week.
Asian markets were broadly lower, with South Korea's Kospi index plummeting over 6 percent and Japan's Nikkei tumbling nearly 2 percent as warnings mounted around the AI trade.
Broadcom and Intel CEOs have flagged capital costs and uncertain returns as potential constraints on AI infrastructure expansion as Chinese artificial intelligence models gain users rapidly.
Last week, billionaire Ray Dalio warned that AI is a 'classic bubble' that is nearing a bursting point.
As the AI hype fades, investors are weighing the outlook for capital spending against rising borrowing costs and elevated valuations.
Gold traded half a percent higher at 4,197 an ounce as the U.S. dollar retreated from an 18-month high despite hawkish Fed remarks and escalating Middle East tensions, with Saudi Arabia announcing it was continuing to deal with drone and missile attacks after a weekend of confrontation with the Houthi militia in Yemen.
Cleveland Fed President Beth Hammack said on Monday the U.S. central bank should move 'relatively quickly' to a restrictive monetary policy to keep inflation expectations anchored, but stopped short of backing another rate increase this month.
Brent crude prices fell more than 1 percent to $105.37 a barrel, snapping a three-session winning streak as Russia partially lifted its diesel export restrictions, helping ease supply constraints in global fuel markets.
U.S. stocks ended mixed overnight, with rising oil prices as well as concerns about AI funding and rapid adoption of Chinese frontier AI models keeping investors on edge ahead of a busy week of corporate earnings and inflation data.
Oil prices rose by nearly $2 a barrel after Ukrainian President Volodymyr Zelenskyy accused Russia of continuing to attack Ukraine's energy facilities despite U.S. President Trump's claim of an 'energy ceasefire' between the two countries.
Following another deadly attack on Riyadh's international airport, Trump said he is 'looking at' joining Saudi Arabia's fight against the Houthis.
While the Dow edged up 0.4 percent, the S&P 500 finished marginally lower and the tech-heavy Nasdaq Composite dropped 0.4 percent.
European stocks closed higher for a second straight session on Monday after the Russia-Ukraine energy ceasefire announcement.
The pan-European STOXX 600 advanced 0.7 percent. The German DAX surged 0.8 percent, France's CAC 40 rose 0.4 percent and the U.K.'s FTSE 100 rallied 1 percent.
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