Europe’s STOXX 600 dips ahead of Powell testimony; Indivior sinks

By Shubham Batra

(Reuters) -European shares dipped on Tuesday as investors awaited Federal Reserve Chair Jerome Powell’s testimony to gauge the likelihood of a rate cut in September, while Indivior sank to a three-year low after lowering its profit forecast.

The pan-European STOXX 600 index was down 0.1%, led by losses in energy shares that tracked lower oil prices and in automobile and parts.

Miners were the top gainers, rising 0.5% as copper prices rose slightly.

Powell is scheduled to start his two-day, semi-annual monetary policy testimony before Congress at 10 a.m. ET (1400 GMT). Money markets currently see a 77% chance of a rate cut by the Fed in September.

“The first day of the testimony is always the most important day as we will get to catch the overall tone and the key messages,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

“Some expect Powell to sound cautious regarding the progress on inflation and tell U.S. politicians to be patient until the Fed gathers enough evidence that inflation is on a solid path toward their 2% target.”

European Central Bank board (ECB) member Piero Cipollone’s comments later in the day will also be on investors’ radar to gauge the ECB’s interest rate trajectory.

The main focus, however, will be on U.S. and German consumer prices data on Thursday that will give direction to the global monetary policy.

European equities have gained around 8% this year so far as investors remained sanguine for more rate cuts by the ECB, but minor blips from French stocks kept the gains on the benchmark index in check in the run-up to the elections.

Among individual movers, Indivior tumbled nearly 39%, the most among index peers, after it lowered its profit forecast for the year and said it would discontinue sales of its schizophrenia drug Perseris as well as cut about 130 jobs.

BP slipped 3.5% as it expects lower realised refining margins and weak oil trading to hurt its second-quarter earnings.

Dassault Systemes declined 4.1% as the French software company cut its full-year earnings target, saying its customers were being cautious with spending and were delaying the signing of contracts.

The company dragged the French stocks 0.5% lower.

Grifols shares jumped 3.7% to the top of the benchmark index as the Grifols family and Canadian fund Brookfield agreed to evaluate a possible joint takeover bid for the beleaguered Spanish drugmaker with the intent to delist it.

(Reporting by Shubham Batra and Purvi Agarwal in Bengaluru; Editing by Sonia Cheema and Savio D’Souza)


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