European stocks are poised to open predominantly lower on Tuesday, as investors express concerns over France's uncertain political environment, economic stability, and growth prospects.
Conversely, U.K. stocks might see a rise at the opening, buoyed by Finance Minister Rachel Reeves' announcement of plans to unblock infrastructure projects and stimulate private investment as part of a new "national mission" aimed at driving economic growth.
France's political landscape remains fragmented following Sunday's election results, with no party securing an absolute majority in parliament. This has led to significant uncertainty regarding the kind of government that will be formed. The potential for policy gridlock is troubling, raising doubts about the new government's ability to implement necessary reforms and sustain the country's sovereign rating.
In Asia, markets traded mostly higher. Japan's Nikkei rallied more than 2%, supported by a weaker yen and gains in tech stocks.
Meanwhile, the dollar hovered near a multi-week low against other major currencies as investors awaited crucial U.S. data on consumer and producer price inflation, along with Federal Reserve Chair Jerome Powell's congressional testimony, for indications on the U.S. central bank's policy trajectory. Powell is scheduled to address Congress today and tomorrow, while the U.S. CPI report for June will be released on Thursday.
Additionally, the U.S. earnings season is set to pick up momentum this week, with major banking firms such as JPMorgan Chase & Co., Wells Fargo & Co., and Citigroup Inc. slated to report their quarterly results on Friday.
In commodities, gold edged up slightly in Asian trade, whereas oil continued to decline after a hurricane that struck a key U.S. oil-producing region in Texas caused less damage than anticipated.
Overnight in the U.S., stocks ended mixed as investors geared up for a busy week of key economic events and reflected on data that indicated a slowdown in payroll hiring in the latter half of the year. The Nasdaq Composite, noted for its heavy tech presence, rose 0.3%, and the S&P 500 added 0.1%, reaching record highs as shares of chipmakers surged. The Dow Jones Industrial Average ended marginally lower.
On Monday, European stocks mostly closed lower following France's legislative elections, which resulted in a hung parliament, with the National Assembly divided into three distinct blocs. The pan-European STOXX 600 ended flat with a slight negative inclination. The German DAX also finished marginally lower, the U.K.'s FTSE 100 slipped 0.1%, and France's CAC 40 dropped 0.6%.
