Volkswacht Bodensee - Markets mixed as traders eye US rate cut

Traders have been more cautious this week after US Federal Reserve chairman Jerome Powell sent markets soaring on Friday when he signalled that a rate cut was coming as inflation is cooling.

Powell was followed Monday by the head of the San Francisco Fed, Mary Daly, who said it was "hard to imagine" not cutting next month.

Investors will pore over a clutch of US indicators later this week for clues about the size of the promised rate reduction, which the Fed is expected to deliver at its next meeting on September 17-18.

US second-quarter economic growth figures are due Thursday, followed by the Fed's preferred gauge of inflation on Friday and jobs data next week.

Traders are also eagerly awaiting the latest earnings results from chip titan Nvidia, which will be released Wednesday and could provide more clues about demand for the hardware powering the AI boom.

While European stocks were mostly higher on Tuesday, "direction could be lacking ahead of Nvidia results later in the week", Jane Foley, head of foreign exchange strategy at Rabobank London, told AFP.

She said the markets are also seeking "more clarity from US economic data about the amount that the Fed may be prepared to ease in September and in the coming months".

London's FTSE 100, which closed for a bank holiday on Monday, and Frankfurt's DAX were up while the Paris CAC 40 was flat.

In Asia, Hong Kong rose despite losses in the tech sector that came after Temu owner PDD posted disappointing revenue figures and warned on the outlook for future growth.

The e-commerce firm's shares, which are listed in New York, tanked a record 28.5 percent, wiping tens of billions off its market capitalisation.

In Hong Kong, rivals Alibaba and JD.com both sank around four percent.

Tokyo and Mumbai rose but Shanghai, Seoul, Sydney and Taipei slipped.

- Middle East fears -

Investors are also tracking tensions in the Middle East after Sunday's exchange of fire between Iran-backed Lebanese militant group Hezbollah and Israel raised fears of a broader conflict.

Crude prices eased slightly but held most of Monday's gains of at least three percent, with Brent, the international benchmark, sitting above $80 per barrel.

Traders were also jolted by news that the eastern-based administration in oil-rich Libya will close fields under its control and suspend production and exports "until further notice".

"A mix of geopolitical tensions, volatile oil prices, and mixed economic data has created a complex and uncertain backdrop for global financial markets," said Luca Santos, currency analyst at ACY Securities.

"While the initial response has been one of caution, the evolving nature of these risks means that market conditions could change quickly," Santos said.

- Key figures around 1030 GMT -

London - FTSE 100: UP 0.2 percent at 8,342.20 points

Paris - CAC 40: FLAT at 7,591.24

Frankfurt - DAX: UP 0.2 percent at 18,645.03

Tokyo - Nikkei 225: UP 0.5 percent at 38,288.62 (close)

Hong Kong - Hang Seng Index: UP 0.4 percent at 17,874.67 (close)

Shanghai - Composite: DOWN 0.2 percent at 2,848.73 (close)

Dollar/yen: UP at 144.83 yen from 144.53 yen on Friday

Euro/dollar: DOWN at $1.1164 from $1.1166

Pound/dollar: UP at $1.3221 from $1.3184

Euro/pound: DOWN at 84.44 pence from 84.64 pence

West Texas Intermediate: DOWN 0.8 percent at $76.83 per barrel

Brent North Sea Crude: DOWN 0.6 percent at $80.95 per barrel

New York - Dow: UP 0.2 percent at 41,240.52 (close)

R.Fischer--VB