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Stocks rally stalls, eyes Powell testimony for rate clues

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Global shares drifted on Monday, consolidating gains after hitting a 14-month high last week, as investors awaited testimony from U.S. Federal Reserve Chair Jerome Powell in markets that remain dominated by monetary policy bets.

The MSCI’s broad gauge of world stocks was steady, with Wall Street markets closed for the Juneteenth holiday.

In Europe, the Stoxx 600 share index fell 0.5% in early trading.

After a week in which the stock market cheered the Fed’s decision to skip a rate increase in June, Powell is scheduled to deliver congressional testimony on Wednesday and Thursday.

Hopes that the Fed will end its most aggressive rate increase campaign in decades are boosting global stock indices dominated by the U.S. tech megacaps that tend to outperform when risk appetite is buoyed by easier monetary policy.

Billions of dollars have flowed into big tech in recent weeks, with analysts citing the productivity-improving potential of artificial intelligence for the rally.

“The obvious narrative of AI has dominated this rally in tech stocks,” said Dan Cartridge, portfolio manager at Hawksmoor.

“But a lot of it is also to do with interest rate expectations,” he added, warning that the Fed staying hawkish would mean “we quite quickly see valuation compression again.”

In Europe, sterling traded near its highest against the dollar since April 2022, at $1.2814.

Bets that the Bank of England would raise interest rates to a 15-year high this week, as inflation continues to run at more than four times its target, have bolstered the pound.

Two-year British government bond yields, which reflect rate expectations, added 6 basis points (bps) to around 4.94% – near last week’s 15-year high. The 10-year British gilt yield stood at 4.4%, in an inverted yield curve pattern that can precede recessions.

In Asia, Japan’s Nikkei tumbled 1%, edging down from three-decade highs.

Chinese blue chips fell 0.9%, while Hong Kong’s Hang Seng index slumped 1.2%, as investors’ hopes of forceful economic stimulus from Beijing were dashed by the lack of concrete details from a cabinet meeting on Friday.

Goldman Sachs (NYSE:GS) on Sunday cut its forecast for China’s GDP growth this year to 5.4% from 6.0%, joining other major banks to slash growth expectations for the world’s second largest economy.

But the People’s Bank of China is also widely expected to cut its benchmark loan prime interest rates on Tuesday, following a similar reduction in medium-term policy loans last week.

Elsewhere, the dollar index was little changed against major peers at 102.33 on Monday, after falling 1.2% the previous week, the most in five months.

The yen was undermined by Friday’s dovish Bank of Japan meeting , touching a seven-month low of 141.97 per dollar, while the hawkish European Central Bank, which raised rates by a quarter point last week, helped the euro hold near a five-week top at $1.093.

In oil markets, U.S. crude futures fell 0.9% to 71.12 per barrel, and Brent crude was down 0.6% to $76.13. [O/R]

Gold prices were flat at $1,954.39 per ounce.

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Comet fragment lights up sky over Spain and Portugal ‘like a movie’

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By Catarina Demony and Ana Cantero

LISBON (Reuters) – A bright comet fragment lit up the skies over parts of Spain and Portugal late on Saturday, according to the European Space Agency (ESA), with one Lisbon resident saying the dazzling display “felt like a movie”.

On Sunday morning, the ESA shared on X a video captured by its “fireball camera” of what it described as a “stunning meteor” over the skies of the western Spanish city of Caceres, near the Portuguese border.

But it later said it appeared to be a “small piece of a comet” and not a meteor, estimating it flew over Spain and Portugal at a speed of 45 km (28 miles) per second before burning up over the Atlantic.

“The likelihood of any meteorites being found is very low,” the ESA said.

In both countries, videos shot in several cities and towns went viral on social media, showing the object crossing the night sky at high speed and illuminating it in bright tones of blue and green.

The Spanish Calar Alto astronomical observatory also said a preliminary analysis by Andalusia’s Institute of Astrophysics revealed the object had a “cometary origin”.

During a concert in the Portuguese city of Barcelos, the object was filmed streaking across the sky as the singer performed. Another video showed the skies of Porto, Portugal’s second biggest city, turning bright for a few seconds.

Many contacted emergency services to report what happened. A spokesperson for the Spanish Emergency service 112, in Madrid, told Europa Press news agency it had received several calls.

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Lisbon resident Bernardo Taborda, 31, told Reuters he was walking around the city with friends when the sky suddenly turned bright green: “It almost looked like daylight … we all looked back and saw it.”

“It felt like a movie, we all looked at each other and we were stunned,” Taborda said. “It was amazing.”

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Helicopter carrying Iran’s President Raisi crashes in mountains, official says

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By Parisa Hafezi and Elwely Elwelly

DUBAI (Reuters) -A helicopter carrying Iranian President Ebrahim Raisi and his foreign minister crashed on Sunday as it was crossing mountain terrain in heavy fog, an Iranian official told Reuters, and rescuers were making their way to the site of the incident.

The official said the lives of Raisi and Foreign Minister Hossein Amirabdollahian were “at risk following the helicopter crash”, which happened on the way back from a visit to Iran’s border with Azerbaijan.

“We are still hopeful but information coming from the crash site is very concerning,” said the official, speaking on condition of anonymity.

The bad weather was complicating rescue efforts, the state news agency IRNA reported. The chief of staff of Iran’s army ordered all the resources of the army and the elite Revolutionary Guard to be put to use in the search and rescue operations.

State TV stopped all its regular programming to show prayers being held for Raisi across the country and, in a corner of the screen, live coverage of rescue teams deployed on foot in the mountainous area in heavy fog.

The rescue teams were expected to reach the site of the crash later on Sunday evening, state TV reported.

Raisi, 63, was elected president in 2021, and since taking office has ordered a tightening of morality laws, overseen a bloody crackdown on anti-government protests and pushed hard in nuclear talks with world powers.

In Iran’s dual political system, split between the clerical establishment and the government, it is the supreme leader rather than the president who has the final say on all major policies.

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But many have seen Raisi as a strong contender to succeed his 85-year-old mentor, Supreme Leader Ayatollah Ali Khamenei, who has strongly endorsed Raisi’s main policies.

Raisi’s victory in a closely managed election in 2021 brought all branches of power under the control of hardliners, after eight years when the presidency had been held by pragmatist Hassan Rouhani, who negotiated a nuclear deal with Washington.

However, Raisi’s standing may have been dented by widespread protests against clerical rule and a failure to turn around Iran’s economy, hamstrung by Western sanctions.

Raisi had been at the Azerbaijani border to inaugurate the Qiz-Qalaisi Dam, a joint project.

Interior Minister Ahmed Vahidi told state TV only that one of the helicopters in a group of three had come down in the incident, and that authorities were awaiting further details.

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Sean ‘Diddy’ Combs apologizes after video depicting attack on ex-girlfriend

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By Katharine Jackson

(Reuters) – Music mogul Sean “Diddy” Combs posted an apology to social media on Sunday, two days after the release of hotel surveillance video that appeared to show him attacking his ex-girlfriend.

“I’m truly sorry,” Combs said in a video post on his Instagram page. “My behavior on that video is inexcusable. I take full responsibility for my actions in that video. I’m disgusted. I was disgusted then when I did it. I’m disgusted now.”

Addressing the camera directly, Combs said he had sought therapy and gone into rehab.

In the surveillance video from 2016, which was released by CNN on Friday, the rapper appears to grab R&B vocalist Casandra Ventura as she waits by an elevator in a California hotel. Clad only in a towel, he throws her to the floor, kicking her repeatedly before dragging her toward a hallway, the video shows.

A representative for Combs could not be immediately reached for further comment.

Ventura, who performs under the stage name Cassie, sued Combs in 2023, accusing him of serial physical abuse, sexual slavery and rape during a 10-year professional and romantic relationship in which he controlled her through intimidation, drugs and alcohol. The parties settled the matter the following day for undisclosed terms. Representatives for Combs said at the time the settlement was “in no way an admission of wrongdoing.”

The lawsuit was one of at least four civil complaints in recent months that leveled sexual assault allegations against Combs.

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The U.S. Department of Homeland Security said in March it had opened an investigation into the hip-hop star and searched his homes in the Miami area and in Los Angeles; it provided no details of the nature of the investigation.

Local television images of the search showed an armored vehicle and officers carrying rifles outside Combs’ Los Angeles home. Authorities detained some people at the property with their hands bound by zip ties.

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