Europe Shares to Open Lower, Bernanke Comments Weigh
European shares were set to fall for a sixth straight session on Wednesday, tracking falls in Asia and on Wall Street following downbeat comments from US Federal Reserve Chairman Ben Bernanke on the state of economy.
In a speech on Tuesday, Bernanke said there was a slowdown in the world's biggest economy, but offered no indication new stimulus measures were on the cards.
Financial spreadbetters expected Britain's FTSE 100 to open 17-29 points lower, or as much as 0.5 percent; Germany's DAX to fall 28-38 points, or as much as 0.5 percent; and France's CAC 40 to open down 20-23 points, or as much as 0.6 percent.
On Tuesday, London’s FTSE closed up 1.49 points to 5864.65, the DAX was up 18.68 points to 7103.25 and the CAC 40 in Paris ended trading up 8.52 points to 3871.92.
In the US, stocks gave up all of the day’s earlier gains, closing lower for a fifth consecutive session, after Fed chairman Ben Bernanke acknowledged a slowdown in the US economy.
In Asia, stocks also fell following Bernanke’s bearish comments, but JP Morgan improved its stance on Japan’s banking sector to “slightly bullish” from “neutral”.
The euro rose to a one-month high of $1.4696 before falling back to $1.4658 in Asia overnight, but still close to the $1.4700 barrier and within easy reach of $1.4732 – the 78.6 percent retracement of the May 4 – May 23 fall.
The dollar also suffered from Bernanke’s comments and the expectation that US interest rates will remain low for longer.
Still, persistent concerns over the euro zone are likely to curb the single currency’s advance, with a German newspaper quoting the country’s finance minister Wolfgang Schaeuble saying Greece needs substantial further aid from the euro zone to avoid insolvency.
In Vienna, the OPEC conference gets underway on Wednesday, the first since the December meeting where OPEC decided not to alter production and before a period of unprecedented political unrest in the Middle East.
In Greece, Prime Minister George Papandreou is expected to present a new austerity program to parliament as a condition of a second 12 billion euro bailout agreed last week with the EU, IMF and ECB.
French finance minister Christine Lagarde will be in Chinaas she campaigns to become the next managing director of the IMF, while in Tokyo the acting head John Lipsky will announce the organization’s opinion on the Japanese economy.
Britain’s banking chiefs, including Barclay’s boss Bob Diamond, will give evidence before the Treasury Committee on an interim report by the Independent Commission on Banking, starting at 2:30 pm London time.
Economic data out on Wednesday includes April’s foreign trade balance data for Germany and France which will be available at 7:00 and 7:45 respectively.
Germany’s Bundesbank will also release its current account information for April at 8:00.
The EU’s first quarter second GDP estimate will be released at 08:00 and the German industrial production index for April will be out at 11:00.