TSX down after index extends retreat from all-time high
Investing.com - European stocks closed mostly higher Tuesday, buoyed by gains on Wall Street overnight, and followed the release of the latest regional activity data.
The the DAX index in Germany gained 0.4%, the CAC 40 in France climbed 0.5% and the FTSE 100 in the U.K. was flat.
Powell speech in spotlight
Global markets have retained a positive leaning, with the main Wall Street indices closing higher on Monday, in the wake of the Federal Reserve’s interest rate cut last week, expecting further easing from the U.S. central bank’s two remaining meetings this year.
New Fed Governor Stephen Miran, selected by President Donald Trump for the role, called for large rate cuts on Monday, and futures imply around a 90% chance of a further quarter-point rate cut in October, and a 75% probability of an easing in December as well.
There are more Fed speakers due Tuesday, including Raphael Bostic and Michelle Bowman, but the highlight will be comments from Fed Chair Jerome Powell later in the session.
These comments will be crucial in determining investor sentiment in the near term.
Eurozone PMIs
Back in Europe, attention was on the release of the flash PMIs for September. For the Eurozone, the composite PMI increased from 51 to 51.2 in September. Meanwhile, in Germany, the HCOB manufacturing PMI came in at 48.5 for September, down from 49.8.
Burberry recovery “overpriced” - Jefferies
In the corporate sector, Burberry (LON:BRBY) will be in the spotlight after the British luxury fashion label rejoined London’s FTSE 100 on Monday, one year after exiting the top-tier stock index, and ahead of unveiling its latest collection at London Fashion Week.
However, Jefferies warned that hopes for a swift recovery at the fashion house are overpriced, reiterating its “underperform” rating, and seeing the potential for around 40% downside.
The brokerage said optimism around Burberry’s ability to rebuild profit margins is entering a critical test period.
The brokerage cautioned that “the emergence of broadly unchanged sales productivity in Q2, despite all the right commercial steps having been undertaken, would weaken the bullish narrative as H2 profit delivery demands a clear acceleration in momentum.”
Crude gains
Oil prices initially dropped on Tuesday due to continued oversupply concerns, after a preliminary agreement was reached between Iraq and Kurdish regional governments to restart an oil pipeline. However, later in the session, prices began to rise.
At 12:01 ET, Brent futures rose 1.9% to $67.83 a barrel, and U.S. West Texas Intermediate crude futures climbed 2.2% to $63.63 a barrel.
Both contracts were on a losing streak.
Iraq’s federal and Kurdish regional governments reached a deal with oil firms to resume crude exports via Turkey on Monday, Reuters reported, potentially allowing exports of about 230,000 barrels per day to resume, having been suspended since March 2023.
Later in the day, Reuters reported that pipeline exports from Iraq’s Kurdistan region to Turkey had yet to restart, despite hopes of a deal. This was said to be due to two key producers asking for debt repayment guarantees.
In its latest monthly report, the International Energy Agency said world oil supply will rise more rapidly this year and a surplus could expand in 2026 as OPEC+ members increase output and supply from outside the group grows.