European equities opened higher on Tuesday, following a day of severe losses in Asia, as investors awaited the outcome of Federal Reserve chair Jerome Powell’s two-day policy meeting, which finishes on Wednesday.
The possibility of a clash between Russia and Ukraine, as well as concerns about coronavirus outbreaks, added to the uncertainty.
In early trade, France’s CAC 40 rose 1.1 percent to 6,861.14, while Germany’s DAX rose 0.6 percent to 15,100.95.
The FTSE 100 index in the United Kingdom increased by 0.5 percent to 7,334.99.
The Dow Jones Industrial Average’s future was down 1.1 percent, while the S&P 500’s future was down 1.6 percent.
A late buying binge boosted the benchmark S&P 500 index to a 0.3 percent gain on Monday, bringing it out of so-called correction territory, which is defined as a decline of 10% or more from a recent high.
The Fed meeting will provide an update on policymakers’ current economic and interest rate thoughts.
Some analysts worry that the Fed is taking too long to reduce inflation by boosting interest rates, which have been held low for nearly two years to support markets and economies hit hard by the pandemic.
Others are concerned that the Fed will move too forcefully, risking a recession while failing to control inflation.
Meanwhile, tensions between Russia and the West have risen on fears that Moscow is planning an invasion of Ukraine, with NATO preparing to deploy troops and ships.
The Pentagon has raised the alert level for 8,500 troops who might be deployed to Europe as part of a NATO “reaction force” in the event of a military action against Ukraine. President Joe Biden has met with key European leaders, emphasising the United States’ commitment to its allies in the region.
Asian stocks fell as the Japanese government announced a plan to increase the locations where pandemic restrictions are recommended to help stop the spread of COVID-19. This will put a damper on business and travel once more.
Toyota Motor Corp.’s stock dropped about 2 percent after the country’s largest automaker said it needed to make more adjustments to its manufacturing in Japan due to a shortage of computer chips caused by disruptions caused by COVID-19 restrictions and infections. Toyota has apologised for delaying delivery of its products.
The Nikkei 225, Japan’s main stock index, fell 1.7 percent to 27,131.34.
The S&P/ASX 200 index in Australia fell 2.5 percent to 6,961.60.
The Kospi in South Korea fell 2.6 percent to 2,720.39.
The Hang Seng Index in Hong Kong down 1.7 percent to 24,243.61, while the Shanghai Composite fell 2.6 percent to 3,433.06.
In oil trading, the New York Mercantile Exchange’s benchmark U.S. crude rose 48 cents to $83.79 a barrel in electronic trading. On Monday, it fell $1.83 to $85.31.
Brent crude, the benchmark for international oil prices, gained 59 cents to $86.86 a barrel.
The US dollar slipped to 113.84 Japanese yen from 113.96 yen in currency trade.
The euro was trading at $1.1311, down from $1.1326 the day before.
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