(Please note that Powell is speaking before the Senate Banking Committee (not the House of Representatives))

by Diana Mandia

(Reuters) – Wall Street is expected to edge higher on Tuesday while European stocks were down mid-session as investors remain cautious ahead of the Federal Reserve chairman’s speech to the Senate Banking Committee later in the day.

New York index futures signaled a 0.08% opening for Wall Street for the Dow Jones, 0.23% for the Standard & Poor’s-500 and 0.39% for the Nasdaq. In Paris, the CAC 40 lost 0.85% to 7,562.79 points at around 11:10 GMT. In Frankfurt, the Dax fell 0.45% and in London, the FTSE 100 lost 0.19%.

The EuroStoxx 50 index lost 0.57%, the FTSEurofirst 300 0.33% and the Stoxx 600 0.35%.

Caution is required in Europe ahead of Federal Reserve Chairman Jerome Powell’s speech to the Senate Banking Committee starting at 1400 GMT on Tuesday. He will then appear before the House Financial Affairs Committee on Wednesday.

Jerome Powell’s comments will be closely watched for signals on rate-cutting plans after signs of a slowdown in the US labour market and amid a showdown, in the middle of an election period, between Republicans and Democrats over the path of monetary policy.

Investors are betting about 80% that the string of weak labor market data will lead to a Fed rate cut in September.

In Europe, comments by Piero Cipollone, a member of the executive board of the European Central Bank (ECB), later in the day will also be in investors’ sights.

Bundesbank President Joachim Nagel said in an interview with German newspaper Tagesspiegel on Tuesday that Frankfurt expected eurozone inflation to reach its 2 percent target by the end of 2025 at the latest.

The central bankers’ agenda has helped to divert investors’ attention from France, where negotiations are continuing to form a coalition capable of governing the eurozone’s second-largest economy after the legislative elections, won, without an absolute majority, by the left-wing New Popular Front (NFP) alliance.

VALUES TO FOLLOW ON WALL STREET

Technology and semiconductor stocks are expected to extend yesterday’s rally on Tuesday ahead of Jerome Powell’s speech.

Intel shares jumped 3.8% in pre-market trading after gaining more than 6% on Monday, while Nvidia gained 1.1%.

VALUES IN EUROPE

In terms of values, Dassault Systèmes, which reported a shortfall in its second quarter revenue on Tuesday and revised its annual targets downwards, lost 5.2%.

Verallia fell by 14.3% after announcing on Monday the lowering of its adjusted EBITDA forecast for 2024, to around 866 million euros compared to around 1 billion euros previously.

Artificial heart manufacturer Carmat, which announced half-yearly sales of 3.2 million euros on Tuesday, gained 2.3%.

French banking stocks, including BNP Paribas, Société Générale and Crédit Agricole, continued to decline amid political uncertainty, losing around 2%.

Elsewhere in Europe, British major BP fell 4.3% after announcing that it expected lower refining margins and weak oil trading to negatively affect its financial results in the second quarter.

RATE

Eurozone bond yields rose on Tuesday ahead of Powell’s speech.

The ten-year German Bund rate gained 2.5 basis points to 2.5450% and the two-year bond rate gained 1.9 basis points to 2.9270%.

In France, the yield on the ten-year OAT rose by 4.2 basis points to 3.2120%.

In the United States, the yield on ten-year Treasuries also rose before the comments from the Fed chairman, rising 2.3 basis points to 4.2920%.

CHANGES

On the foreign exchange market, the dollar gained 0.03% against a basket of reference currencies, while the euro lost 0.01% to 1.0821 dollars.

However, the dollar remains near its lowest level in almost a month, weighed down by unexpected weakness in the US jobs market, which suggests an imminent rate cut.

OIL

Crude prices fell Tuesday as Hurricane Beryl caused less damage than expected to oil facilities in the Gulf of Mexico, easing fears of supply disruptions.

Brent crude fell by 0.35% to $85.45 per barrel and US light crude (West Texas Intermediate, WTI) by 0.43% to $81.98.

NO MAJOR ECONOMIC INDICATORS ON THE AGENDA FOR JULY 9

(Written by Diana Mandiá, edited by Kate Entringer)

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