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European stocks lower; U.S. debt agreement needs to get through Congress

Investing.com - European stock markets edged lower Tuesday, with investors anxious to see how the weekend’s U.S. debt ceiling agreement will proceed through Congress.

At 03:20 ET (07:20 GMT), the DAX index in Germany traded 0.1% lower, the CAC 40 in France fell 0.8%, while the FTSE 100 in the U.K. climbed 0.3%.

President Joe Biden and House Majority Leader Kevin McCarthy reached an agreement over the weekend to lift the $31.4 trillion federal debt ceiling until January 2025 in exchange for caps on spending and cuts in government programs.

However, the optimism surrounding this deal, thus avoiding a default on U.S. debt, has been tempered by concerns on how it will fare as it proceeds through both houses of a divided Congress.

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Back in Europe, the Spanish inflation reading surprised on the downside in May, falling 0.1% on the month, translating into an annual rise of 3.2%, much lower than the 4.4% expected.

Additionally, Spanish retail sales rose 5.5% on the year in April, significantly better than the 0.7% gain expected, while the Swiss economy grew by a faster than expected rate at the start of the year, supported by robust domestic demand and rising exports.

Spanish Prime Minister Pedro Sanchez called a snap election for next week, in a surprise move to try and keep his Socialist party in power after a regional election defeat over the weekend.

In corporate news, WPP (LON:WPP) stock rose 2.5% after the ad giant announced plans to work with chipmaker Nvidia (NASDAQ:NVDA) in order to use generative artificial intelligence in advertising.

Oil prices edged lower Tuesday, reversing earlier gains on U.S. debt ceiling optimism as a stronger dollar and concerns about China’s lackluster economic recovery weighed.

Worries over the strength of the Chinese recovery, the world’s largest crude importer, have hit the crude market this year, and traders are focusing on key manufacturing and service sector data for May, due on Wednesday.

A stronger dollar, which makes crude more expensive for foreign buyers, also weakened the oil market as hotter-than-expected U.S. inflation data pointed towards further interest rate hikes by the Federal Reserve.

By 03:20 ET, U.S. crude futures traded 0.7% lower at $72.17 a barrel, while the Brent contract dropped 1% to $76.36.

Additionally, gold futures fell 0.4% to $1955.05/oz, while EUR/USD traded 0.3% lower at 1.0682.

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