European stocks swing to the red as telecoms fall, Fed’s Powell comes into focus

0
221


European stocks swung lower Tuesday, facing a second straight loss as telecom shares came under pressure while investors appeared to step back from risk ahead of testimony about monetary policy from U.S. Federal Reserve Chairman Jerome Powell.

How markets are performing

The Stoxx Europe 600 index












SXXP, -0.20%










 fell 0.3% to 383.91, with the telecom sector losing the most, but the basic materials and financial groups holding to small gains. The pan-European index had been up by a modest 0.2% earlier in the session. On Monday, it lost 0.3%.

On national indexes, France’s CAC 40 index












PX1, -0.30%










fell 0.4% to 5,386.30, and Germany’s DAX 30 index












DAX, -0.10%










moved down 0.2% to 12,532.81. Spain’s IBEX 35












IBEX, -0.60%










 gave up 0.7% to 9,651.00.

The U.K.’s FTSE 100 index












UKX, +0.13%










was down 0.1% to 7,593.88.

In currencies, the euro












EURUSD, -0.1708%










slipped to $1.1705 from $1.1712 late Monday in New York.

What is driving the market?

European stocks stepped lower as the session wore on, weighed largely by a slump in telecom stocks. The Stoxx Europe 600 Telecommunications Index












FXK, -1.82%










 fell 1.7%, on track for its worst performance in two months and in line for a seventh straight loss. Decliners included Telenor ASA after Norwegian company issued financial results and its rival, Telia Co., struck a more than $2 billion acquisition deal aimed at bolstering Telia’s business in Norway.

European stocks overall drifted lower alongside U.S. stock futures before Fed chief Powell begins his testimony before the Senate Banking Committee at 10 a.m. Eastern Time. The American central bank has indicated it plans to raise interest rates another two times in 2018, and investors will watch for signs of confirmation of this view from Powell.

Read: Powell to defend pace of one interest-rate hike every three months

While the Fed has been firmly on the rate-hike path, the European Central Bank isn’t expected to begin raising interest rates until around the third quarter of 2019.

What strategists are saying

Powell is “likely to reiterate the modestly hawkish Fed view. Still, with recent tensions on the trade front and the palpable slowdown in consumer spending, it will interesting to see if the Fed chair moderates his upbeat view,” said Boris Schlossberg, managing director of FX Strategy, in a note.

“Yesterday Minneapolis President Neel Kashkari noted that the Fed should pay attention to the flattening yield curve and pause in order not to trigger a policy mistake. It’s doubtful that Chairman Powell will be that cautious in his outlook, but if he does give it credence the dollar could sell off as the day proceeds,” Schlossberg added.

Stock movers

Thyssenkrupp AG












TKA, +9.22%










 surged 8.5% following the resignation of supervisory chairman Ulrich Lehner. Lehner’s “sharply worded resignation” on Monday “makes clear that aggressive restructuring may be in the cards,” said Jefferies analyst Seth Rosenfeld in a note.

Schibsted ASA












SCHA, +14.07%










 rallied 13% following second-quarter results from the Norwegian media group, which included a rise to record earnings before interest, taxes, depreciation, and amortization.

SBM Offshore NV












SBMO, -14.33%










 sank 13% after a ratings downgrade at Bernstein of the Dutch offshore oil-and-gas services company to market-perform from outperform.

Husqvarna AB












HUSQB, -18.16%










 sank 18% following financial results from the Swedish garden tool company, which also said it’s planning to restructure its underperforming consumer brands division.

Telia Co. AB












TELIA, -1.84%










 slumped 4% after the Swedish telecom reached a deal to buy TDC A/S’s Norwegian business for 21 billion Norwegian krone, or roughly $2.6 billion.

Telenor ASA












TEL, -4.16%










 fell 3.8% as the Norwegian telecom company’s swing to a second-quarter net profit fell short of expectations. The company did say it will continue to simplify its business and increase efficiency.

Rubis SCA shares












RUI, -8.50%










 tumbled 7.9% as Exane BNP Paribas reportedly cut its rating on the French fuel storage and distribution company to underperform from outperform.

Casino Guichard-Perrachon SA












CO, +2.48%










 rose 2.2% after the French retailer said second-quarter organic sales rose on improvements in France and Latin America.



Source : MTV