Europe open: Shares slip as investors stay wary on US debt deal

European stock markets opened slightly lower Tuesday, as investors stayed cautious on the US debt ceiling deal struck over the weekend.

The pan-European Stoxx 600 index was down 0.15%, with all major bourses lower.

A group of Republican lawmakers on the party’s hard right on Monday said they would oppose the deal agreed between President Joe Biden and House Speaker Republican Kevin McCarthy.

“US markets have not yet had a chance to react to the news that an agreement in principle to the debt ceiling conundrum was reached over the weekend, having been closed on Monday,” said Interactive Investor head of markets Richard Hunter.

“While the initial reaction is likely to be positive, sentiment will be tempered fact that the deal is not yet over the line, with the next hurdle being Congress where there have already been some rumbles of dissatisfaction.”

“In any event, further developments will be keenly awaited this week as the political saga continues to unfold, and until a definitive agreement is reached, markets are likely to resume something of a holding pattern.”

In equity news, Rolls-Royce and BAE Systems fell after India filed a criminal complaint against the companies for "criminal conspiracy" in the procurement and licensed manufacturing of 123 advanced jet trainers.

Dr Martens was also under the cosh after RBC Capital Markets downgraded shares of the iconic bootmaker to ‘sector perform’ from ‘outperform’.

"Whilst we view the longer-term growth potential for DOCS as attractive, we are mindful of nearer term challenges particularly for the US market (37% revenues), which do not appear to be adequately reflected in company FY24E revenue guidance or consensus," it said.

Reporting by Frank Prenesti for Sharecast.com