Auto Shares Lead Declines in European Markets -- 2nd Update
European shares fell Tuesday amid declines in auto and travel stocks, while a speech from the European Central Bank President Mario Draghi sent the euro and government bond yields higher.
The Stoxx Europe 600 was off 0.5% late morning after automotive parts supplier Schaeffler issued a profit-warning late Monday on pricing pressures, sending its shares down nearly 11%.
An advance in Europe's banking sector helped offset declines with Italian banks adding another 1.5% after Italian authorities said Sunday they were prepared to spend as much as EUR17 billion ($19.03 billion) as part of the shutdown of two regional banks. The basic resources sector also rose following a stabilization in iron-ore prices and gains in crude oil futures, gold and copper prices. Brent crude oil was last up 0.9% at $46.48 a barrel.
In U.S. premarket trading, shares of oil-and-gas companies advanced, but futures pointed to a 0.1% opening decline for the S&P 500 as a whole. Shares of Alphabet Inc. were down over 1% after the European Union's antitrust regulator fined Google EUR2.42 billion ($2.71 billion) for favoring its own comparison-shopping service in search results.
Investors were otherwise largely focused on a series of speeches by global central bank officials on Tuesday, including remarks from Mr. Draghi and Federal Reserve Chairwoman Janet Yellen.
The euro climbed 0.6% to $1.1253, around a two-week high, after Mr. Draghi expressed confidence eurozone inflation would ultimately pick up just as growth broadens, ultimately suggesting tighter monetary policy ahead. Yields on 10-year German government bonds rose to 0.286% from 0.247% on Monday, while Treasury yields climbed to 2.155% from 2.135%. Yields move inversely to prices.
"You can clearly see a disconnect between markets and central banks [on the strength of inflationary pressures]" said Florian Ielpo, head of macro strategy at Swiss fund manager Unigestion.
If you see a stabilization of commodity prices, market participants will have to start agreeing with the Fed and the ECB that inflation is slowly picking up, sending bond yields higher, he said.
Ms. Yellen is also set to speak later Tuesday in London on global economic issues as the Fed considers the timing of future interest-rate rises and the start of its plan to wind down its asset holdings. Investors want to know whether Ms. Yellen believes recent softness in some U.S. economic data is transitory. Policy makers' latest forecasts suggest as much, continuing to project three interest-rate increases both this year and next.
But fed-fund futures tracked by CME Group suggest investors currently see just a 13% chance of another rate rise by the end of the September meeting.
During a slow news week as the second quarter comes to an end, "what matters most. is Fedspeak," said Kathy Lien, head of forex strategy at BK Asset Management.
Earlier, stocks mostly extended modest gains in Asia-Pacific trading. Korea's Kospi edged up 0.1%, while Japan's Nikkei added 0.4% to hit its best level in a week following an earlier decline in the yen.
The dollar hit its best level against the Japanese currency in a month, briefly trading above Yen112 before retreating. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was last down 0.3%, with the dollar off 0.1% against the yen and 0.2% against the British pound.
Australian equities were 0.1% lower as gains among major banks and miners were offset by declines elsewhere, particularly in utilities and consumer shares.
Robert Wall and Natalia Drozdiak contributed to this article.
Write to Riva Gold at riva.gold@wsj.com and Ese Erheriene at ese.erheriene@wsj.com
(END) Dow Jones Newswires
June 27, 2017 07:11 ET (11:11 GMT)