Asian markets were mixed, avoiding the technology selloff that gripped Wall Street on Monday, while European stock markets opened higher but have since fallen below flat.
Powell is set to testify before Congress at 10 a.m. Eastern on Tuesday morning. The Fed chair’s first of two speeches this week may touch on monetary policy, but the market will closely watch any comments related to inflation or the recent rise in Treasury yields.
“Inflation fears continue to weigh on markets, and even the European Central Bank signaled yesterday that it is keeping a close eye on bond yields,” said Milan Cutkovic, an analyst at Axi. “There is hope that dovish remarks by U.S. Fed Chair Jerome Powell during his upcoming testimony will calm markets down.”
Read more: What to Watch in Bond Markets This Week: Powell Testimony, the Fed’s Favored Inflation Gauge
“While there are clearly signs of unease in the stock market, vaccination hopes and Democrats rushing to pass the stimulus bill before jobless benefits expire are preventing a larger selloff,” Cutkovic added.
While stocks fell across Europe, shares in travel and leisure groups surged—especially in London trading.
The U.K. is among the world’s leaders in Covid-19 vaccinations, and Prime Minister
Boris Johnson
on Monday set a tentative early date of Jun. 21 for all social restrictions to be lifted. Domestic holidays could become possible by mid-April.
“Travel and leisure stocks are getting a lift this morning after yesterday’s announcement of a reopening schedule in the U.K. prompted a surge in holiday bookings,” Hewson said.
Shares in
British Airways
owner
British Airways
jumped near 7% before paring gains.
Air France–KLM
stock was 5% higher and shares in
Lufthansa
rose 2%. In the aircraft-manufacturing sector,
Airbus
stock rose 3% and shares in troubled British engineer
Rolls-Royce
jumped near 6%.
Optimism was also present in hotel stocks, with shares in
InterContinental Hotels Group,
restaurant and hotels group
Whitbread,
and French hospitality giant
Accor
all climbing.
Oil companies also lifted as crude prices remain at 13-month highs. Benchmark Brent was near 1.5% higher, trading at more than $66.15 per barrel. Shares in
BP,
Royal Dutch Shell,
Total,
and
Eni
all rose.
HSBC
was a major faller in European trading, with the global banking giant down near 2.5% after posting a 34% fall in profits through 2020.
Shares in
Scottish Mortgage Investment Trust
were down more than 6%. The publicly traded trust, run by investment manager Baillie Gifford, has significant holdings in the big tech stocks like Alibaba and Tesla that have suffered recent share price slides.
On the economic front, Powell’s testimony will be the most closely watched event of the day. The FHFA home price index for December 2020 is also due, as is the February consumer confidence index.
In U.S. corporate news, retailers
Home Depot
and
Macy’s
will report results before the market opens, while computer security company
McAfee
and financial services company
Square
are among those that will post earnings after the close.
