European Shares Set For Cautious Open

(RTTNews) - European stocks are seen opening on a cautious note on Tuesday as investors look ahead to monetary policy meetings of central banks, including the U.S. Federal Reserve, the Bank of England and the Bank of Japan this week.

The Federal Reserve's highly anticipated rate decision is due on Wednesday, with the central bank widely expected to hike rates by 25 basis points and deliver at least one more hike by the end of March to fight stubbornly high inflation.

The Bank of England is expected to hold rates on Thursday while the Bank of Japan is widely expected to raise its policy rate by another quarter-point to 1.25 percent on Friday, the highest level in 31 years.

U.S. equity futures traded lower amid renewed West Asia tensions and interest-rate worries.

Asian markets were broadly lower after U.S. semiconductor shares sold off overnight on concerns about artificial intelligence (AI) regulation amidst growing public alarm over its potential dangers.

China's industrial production growth accelerated in August, but bank lending disappointed after a record contraction in July and retail sales registered a weaker expansion, separate set of data revealed today.

Fixed-asset investment declined by 7.2 percent year-on-year in the January-August 2026 period, matching expectations.

The benchmark 10-year U.S. Treasury yield hovered around 5 percent in Asian trade, marking the highest level since October 2023.

Regional bonds followed U.S. Treasuries lower, with Japan's 10-year yields surpassing 3 percent. The U.S. dollar held near a two-week high on hawkish Fed bets while gold was firm at $4,307 an ounce after falling over 1 percent in the previous session.

Brent crude futures rose over 1 percent toward $108 a barrel on supply disruption concerns.

Iran claimed that a supertanker caught fire after striking naval mines while attempting to pass through a restricted area south of the Strait of Hormuz. Tehran also rejected renewed peace talks with the U.S. until its demands are met.

Elsewhere, Ukrainian President Volodymyr Zelenskyy said that Ukraine is prepared to take "de-escalatory steps" if Russia does the same, contradicting U.S. President Trump's claim earlier that both had agreed not to strike each other's energy targets.

U.S. stocks ended well off their day's lows overnight as crude oil prices gave back some ground after soaring nearly 5 percent in early trade following President Trump's claim that Russia and Ukraine have agreed to stop attacking each other's energy targets.

Trump also reiterated that Iran wants to "make a deal, quickly and badly" and that "oil is flowing through the Hormuz Strait."

Fears of a tightening oil market rattled investors after Saudi Arabia closed a critical pipeline that bypasses the Strait of Hormuz following a drone attack.

Additionally, a highly anticipated meeting in Oman between Iran and Gulf States was postponed at the last minute in the absence of conditions conducive to a constructive dialogue.

The tech-heavy Nasdaq Composite ended 0.6 percent lower, after having tumbled as much as 1.3 percent earlier as industry leaders called for a slowdown in the pace of AI development.

President Trump dismissed the warning, saying a slowdown was not needed and would jeopardize America's lead in AI over China.

The S&P 500 dropped half a percent and the narrower Dow eased 0.3 percent.

European stocks fell broadly on Monday, with tech stocks coming under selling pressure on concerns over rising bond yields and risks to AI safety.

The pan-European STOXX 600 dipped half a percent. The German DAX fell half a percent and France's CAC 40 shed 0.8 percent while the U.K.'s FTSE 100 rose 0.4 percent.