Europe Stocks Edge Down Ahead of Fed Testimony

Date : 07/10/2019 @ 10:14AM
Source : Dow Jones News
Stock : FTSE 100 Index (UKX)
Quote : 7392.24  84.54 (1.16%) @ 12:52PM
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Europe Stocks Edge Down Ahead of Fed Testimony

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By Nathan Allen 

-- U.S. futures, European equities decline

-- Asian stocks mostly advance

-- Pound weakens amid continuing U.K. political uncertainty

European stocks slipped on Wednesday as investors awaited Federal Reserve Chairman Jerome Powell's congressional testimony, where he will face questions on the central bank's interest rate intentions.

The pan-continental Stoxx Europe 600 fell 0.2% midmorning to extend Tuesday's losses, dragged down by food-and-beverage and media stocks. Benchmark indexes in France and Germany also posted modest declines.

In the U.S., futures for the S&P 500 and the Dow Jones Industrial Average both fell around 0.1%. Futures don't necessarily predict moves after the market open. The yield on 10-year U.S. Treasurys rose to 2.107% from 2.058% on Tuesday. Yields and prices move in opposite directions.

Data showed the British economy returned to growth in May, reversing a two-month slowdown and easing fears of a contraction in the second quarter. A 24% rise in car production drove the uptick, as auto makers restarted factories they had idled in anticipation of Brexit, which was originally scheduled to take place in April.

However, analysts cautioned that the broader economic picture in the U.K. remains subdued, despite the improvement in manufacturing.

"Recent PMIs indicate that the service sector -- which makes up the lion's share of the U.K. economy -- has struggled to regain momentum amid mounting Brexit uncertainty," said James Smith, ING developed markets economist, adding that he expects business investment to resume its downward trend over the summer.

The pound rose slightly after the data but still hovered around multi-month lows against the euro, while the FTSE 100 index edged down 0.1%.

Global stock markets rallied in June amid hopes for an interest-rate cut, but strong jobs data from the U.S. reduced the case for such an intervention, adding to uncertainty around the Fed's policy direction.

In addition to the Fed chief's testimony, minutes from the central bank's recent policy meeting are due for release later Wednesday, which could provide additional detail on how officials viewed the economic environment.

Asian markets were mostly higher ahead of the closing bell, although Shanghai-listed stocks slipped after Chinese consumer inflation held steady in June. The consumer-price index rose 2.7% on year, in line with expectations, as slowing nonfood prices offset faster gains in food prices.

The Mexican peso continued to trade lower against the dollar on Wednesday after the country's finance minister Carlos Urzúa resigned on Tuesday, citing disagreements with left-wing President Andrés Manuel López Obrador's economic policy.

Elsewhere, the Bank of Canada is expected to keep rates steady at its monetary-policy meeting later today.

In commodities, global oil benchmark Brent crude rose 1.7% to $65.23 a barrel after data from U.S. industry group American Petroleum Institute on Tuesday showed a sharp drop in oil stocks. Gold fell 0.4%.

 

(END) Dow Jones Newswires

July 10, 2019 05:59 ET (09:59 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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