Europe midday: Shares fall ahead of Powell testimony; Indivior tanks

9th Jul 2024 12:10

(Sharecast News) - European stocks were lower at the open as the focus remained on the prospect of a hung parliament in France, while pharma company Indivior slumped on a profits warning and oil major BP fell on a downbeat second-quarter trading update.

The pan-regional Stoxx 600 index 0.36% to 514.48 in early deals. France's CAC 40 was down 0.90% as the political wrangling began between the left-wing alliance and President Emmanuel Macron's centrist alliance on how to form a government.

Sunday's second round of voting saw a shock win for the leftist grouping after a concerted tactical campaign to keep the far-right National Rally party of Marine Le Pen out of power. However, no single group won enough seats to pass the 289 seat threshold required for an absolute parliamentary majority.

This has led to concerns that any coalition would find it difficult to pass legislation.

Eyes were also on Congress testimony by Federal Reserve chair Jerome Powell over the next two days, with focus on the Fed's semi-annual monetary policy report,

"We are seeing jitters in early European trade today, with mainland indices heading lower in a move which continues the selling pressure seen towards the back end of yesterday's session," said Scope Markets analyst Joshua Mahony.

"While the weekend saw the French likely avoid a Far-Right government, the country faces weeks of deadlock as Macron attempts to find a compromise with the Left-wing alliance without ramping up spending. With the French 10-year yield starting to tick higher, there remains clear concern that the country remains in a state of uncertainty which could continue for some time yet."

In equity news, Indivior plunged by more than a third after the company lowered its full-year earnings forecast, announced that it would stop sales of its schizophrenia drug Perseris and cut about 130 jobs.

BP fell after the company said it would take a second-quarter earnings hit of $1bn - $2bn from impairments, and $500m - $700m million due to "significantly lower realised refining margins".

Reporting by Frank Prenesti for Sharecast.com