Stocks diverge before Powell's Fed testimony
New York shares were mostly higher Tuesday as traders awaited testimony from Federal Reserve chief Jerome Powell, while Europe's main stock markets fell as investors fretted about the new political landscape in France.
Powell's remarks to Congress on Tuesday and Wednesday will be analysed for hints on the timing of US rate cuts, as investors bet on a first trim in September.
"Any change from the recent narrative is expected to lean dovish," said Fawad Razaqzada, analyst at City Index. "At best, he may signal that more than one rate cuts could be on the cards. At worst, he will remain tight lipped."
The Dow was little changed and the wider S&P and tech-heavy Nasdaq were up slightly shortly after their opening.
The Paris CAC 40 was down 1.2 percent in mid-afternoon trading -- following on yesterday's 0.6-percent drop -- as investors weighed Sunday's elections, which produced a badly divided parliament where the largest block of seats is held by a left-wing alliance.
The French stock market "is the weakest performer in Europe," noted Kathleen Brooks, research director at XTB.
"Although France has no clear leader right now, the prospect of a far-left party calling the shots and increasing both taxes and spending is worrying investors, and thwarted hopes of a post-election recovery rally in French assets and the euro," she said.
London's top-tier FTSE 100 index was down 0.7 percent, dragged down by a four-percent drop in BP shares after the British energy giant warned second-quarter earnings could take an impairment hit of up to $2 billion.
On the other side of the Atlantic, Fed chair Powell last week fanned hopes of a cut, saying the battle against inflation had made "progress" and the job market was cooling.
Investors are also looking to US consumer inflation data due Thursday for further indications that price increases are still easing as hoped, which would give the Fed greater confidence to start cutting rates.
"The labor market continues to normalize and soften, but we think any further weakening might push the Fed to cut rates before the 2 percent inflation target is reached," Charles Schwab analysts said in a comment.
Wall Street's main indices mostly advanced on Monday, with the S&P 500 and Nasdaq both reaching new records.
The optimistic mood continued into Asia, with Tokyo climbing two percent to close at a record high.
Shanghai reversed early losses to end 1.3-percent after Moody's Ratings revised up its 2024 GDP forecast for China to 4.5 percent.
The dollar was little changed against the euro and pound.
- Key figures around 1340 GMT -
New York - Dow: DOWN 0.1 percent at 39,288.12 points
New York - S&P 500: UP 0.2 percent at 5,584.18 points
New York - Nasdaq composite: UP 0.4 percent at 18,470.69 points
London - FTSE 100: DOWN 0.7 percent at 8,139.34 points
Paris - CAC 40: DOWN 1.2 percent at 7,532.20
Frankfurt - DAX: DOWN 0.8 percent at 18,317.75
EURO STOXX 50: DOWN 0.9 percent at 4,926.61
Tokyo - Nikkei 225: UP 2.0 percent at 41,580.17 points (close)
Hong Kong - Hang Seng Index: FLAT at 17,523.23 (close)
Shanghai - Composite: UP 1.3 percent at 2,959.37 (close)
Euro/dollar: DOWN at $1.0824 from $1.0827 at 2030 GMT on Monday
Euro/pound: DOWN at 84.46 pence from 84.50 pence
Pound/dollar: UP at $1.2813 from $1.2810
Dollar/yen: UP at 161.12 yen from 160.80 yen
West Texas Intermediate: DOWN 0.5 percent at $81.91 per barrel
Brent North Sea Crude: DOWN 0.5 percent at $85.36 per barrel
burs-bcp/gv/cw
F.Thill--RTC
