Powell's Testimony in Focus Amid US Inflation Concerns

Fed Chair Jay Powell begins his two-day Congressional testimony, drawing attention as markets anticipate insights on inflation and policy. The euro remains close to a four-week high following France's inconclusive elections, which avoided far-right fiscal policies. Traders also await the latest US consumer price data due on Thursday.

Equities

The FTSE 100 fell 0.1% to 8,193.49, with resource shares leading the decline, while the FTSE 250 remained flat at 20,798.32. Hiscox saw a significant rise of 13.4% after reports suggested that the Lloyd's of London insurer might be set for a sale. Britvic surged 4.5% following the announcement of its agreement to be taken over by Carlsberg for a sweetened bid of £3.3 billion. Ocado gained 5.4% after enhancing its partnership with Japan's Aeon, planning to build a third robotic warehouse.

In the US, the S&P 500 futures rose 0.2%, and Nasdaq futures increased by 0.3%. This comes after Wall Street equities closed at record peaks on Monday. The main anticipation for US investors is Federal Reserve Chair Jerome Powell's testimony before Congress, with expectations of dovish signals regarding potential rate cuts. The US consumer price report later in the week is also highly anticipated.

Japan's Nikkei jumped 2.3% to a record high, driven by semiconductor shares. The MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.4%, just below a two-year top. Taiwanese shares hit a record high before retreating slightly, down 0.1%, while China's blue-chip index rose 1.1%, and Hong Kong's Hang Seng index increased by 0.5%.

In the forex market, the euro held at $1.0825, while the US dollar steadied near four-week lows at 105.01 against a basket of currencies. The Japanese yen was at 160.95 per dollar, moving away from last week's 38-year low, and the offshore Chinese yuan hovered at 7.2897 per dollar.

Forex & Commodities

The Indian rupee remained flat at 83.4775 against the US dollar, supported by dollar sales from state-run banks despite a general decline among its Asian peers. The dollar index stood at 105 after a slight rise on Monday. Market focus is on Federal Reserve Chair Jerome Powell's upcoming testimony and its implications for potential interest rate cuts.

Gold prices rose 0.2% to $2,363.71 per ounce, with US gold futures up 0.3% to $2,369.80. Investors are keenly awaiting Powell's testimony and the US consumer inflation data, as expectations of lower interest rates could boost gold's appeal. Citi analysts predict a rebound in physical gold demand towards the end of the year, potentially pushing spot prices towards $2,400-$2,600.

Oil prices were stable after Hurricane Beryl caused less damage than anticipated to key US oil-producing regions. Brent futures edged up to $85.79 a barrel, while US West Texas Intermediate crude rose slightly to $82.35. Major refineries along the US Gulf Coast reported minimal impact from the storm, easing concerns over supply disruption.