European shares dip after Powell nomination dents US stocks

Global equities slipped on Tuesday following a decline on Wall Street as traders weighed Jay Powell’s nomination for a second term as Federal Reserve chief and the further surge of coronavirus cases across Europe.

The regional Stoxx Europe 600 opened down around 0.9 per cent, with benchmarks in Germany and France each falling by around that margin. London’s FTSE 100 dipped 0.3 per cent.

The S&P and Nasdaq Composite had ended the prior day’s session down 0.3 per cent and 1.3 per cent lower respectively. Tech stocks are deemed to be more sensitive to rising interest rates, and Fed policy is expected to be more hawkish with Powell as head of the US central bank than under his mooted contender, Lael Brainard, who Biden has tapped for vice-chair.

Futures contracts tracking Wall Street’s blue-chip S&P 500 index were down almost 0.4 per cent, suggesting US equities could come under more pressure at the New York open. Contracts tracking the Nasdaq 100 index slipped 0.5 per cent.

European shares also closed lower on Monday, after several countries were last week forced to reimpose pandemic restrictions, because of surging coronavirus case numbers. The new curbs led to multiple protests over the weekend.

Asian markets moved slightly lower on Tuesday, with the MSCI Asia Pacific index off 0.3 per cent. Hong Kong’s Hang Seng share gauge dipped 1.1 per cent, knocked lower by technology and healthcare stocks among other sectors. China’s CSI 300 was flat, as academic and educational services as well as real estate stocks helped to temper declines in technology and consumer cyclicals.

In government debt markets on Tuesday, the US 10-year Treasury note yield was steady. The yield on the equivalent German Bund was up 0.01 percentage points at minus 0.29 per cent.

Meanwhile, in currencies, the euro traded at near its weakest level against the dollar since July 2020 — up 0.2 per cent at about $1.125.

The Turkish lira hit its weakest point against the dollar on record after the country’s president Recep Tayyip Erdogan praised last week’s 1 percentage point interest rate cut and said his country was fighting an “economic war of independence”. Turkey last week cut its interest rate to 15 per cent, despite annual inflation running at 20 per cent.

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