European stocks drop ahead of Powell’s Fed testimony

European shares declined on Tuesday ahead of Federal Reserve Chair Jerome Powell’s anticipated testimony, influencing market sentiment on potential September rate cuts.

The pan-European STOXX 600 index edged down 0.1 per cent, driven by energy sector losses amid lower oil prices and setbacks in automotive stocks.

Mining stocks, however, saw gains of 0.5 per cent as copper prices saw a modest rise. Powell’s semi-annual monetary policy testimony to Congress, starting at 10 am ET (1400 GMT), carries significant weight, with markets pricing in a 77 per cent chance of a rate cut next month.

Investors are keenly awaiting Powell’s outlook on inflation and economic progress. Additionally, European Central Bank (ECB) board member Piero Cipollone’s remarks on interest rates are closely watched.

Looking ahead, US and German consumer price data due Thursday will guide global monetary policy directions. Despite a year-to-date gain of approximately 8 per cent in European equities, concerns linger, as evidenced by fluctuations in French stocks amid upcoming elections.

Indivior shares plummeted nearly 39 per cent after slashing its profit forecast and discontinuing a drug line, while BP and Dassault Systemes faced declines on earnings concerns. In contrast, Grifols surged 3.7 per cent as news emerged of a potential takeover bid, lifting investor sentiment momentarily.

Attribution: Reuters.