European shares drifted lower on Wednesday as the market volatility remain low. Despite good French industrial output data early in the morning (2.1% vs Exp. 0.2%), investors remain steady prior to the semi-annual testimony from Jerome Powell before Congress. This intervention from the Fed chairman is likely to bring a bit of a storm on financial markets as many investors are unsure on the next monetary policy given the US economy is still sound and may not need any further stimulus. Powell will have to carefully choose his words and the tone he will use as investors will be trying to assess whether the Fed will continue its easing policy or not.
Meantime, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin confirmed they are having resumed talks with their Chinese counterparts, which could also bring a bit of volatility on stocks as the trade war remains one of the biggest concerns of the Fed.
Photo by Zifeng Zhang.
In Europe, the FTSE-100 is one of the only indexes to register a slightly positive performance after the UK Parliament backed a measure making it harder to force a no-deal Brexit. Tory members continue to vote for the next PM and Boris Johnson remains the front runner after yesterday’s TV debate. The market is trading around 7,475 pts after having registered a sharp rebound over 7,455 pts. European stock traders will also pay attention to the Portuguese and Irish CPI prior to Powell’s testimony.
