Global Stock Rally Falters, Focus on Powell Testimony

On Monday, global stocks dropped from 14-month peaks, as investors waited for testimony from U.S. Federal Reserve Chair Jerome Powell as markets stay dominated by bets on monetary policy.

The MSCI's index of global stocks dropped by 0.3%, while U.S. markets were closed for a holiday.

The Stoxx 600 European index dropped 0.7% before Thursdays Bank of England monetary policy decision. The BoE is generally expected to hike interest rates for the 13th straight time.

After a week in which the markets were happy with the Fed's decision to pause rate hikes in June, Powell will deliver testimony before Congress on Wednesday and Thursday.

Expectations that the Fed will end its most aggressive rate hike cycle in decades boosted global stock indices dominated by the U.S. tech mega-caps that generally outperform when risk appetite is boosted by easier monetary policy.

In recent weeks, billions of dollars have been pumped into big tech and analysts say the rally was caused by the potential of artificial intelligence to improve productivity.

Japan's Nikkei dropped 1% as it inched down from 3-decade highs.

Blue chips in China dropped 0.9%, while the Hang Seng Index in Hong Kong fell 1.2%, as investor expectations of economic stimulus by Beijing were sunk by the lack of concrete details from Fridays cabinet meeting.