London (AFP) – Global stock markets diverged Monday as traders assess the US Federal Reserve’s plans for interest-rate cuts while Europe prepares for elections that could dramatically reshape the continent’s political landscape.
As US inflation takes longer to cool than expected, the Fed has signalled one rate cut this year, while analyst opinion varies from zero to three.
Traders are this week awaiting a US retail sales report, inflation figures and central bank rate decisions.
The Bank of England is expected to sit tight on Thursday, as is customary ahead of UK elections. Britons vote for a new government on July 4.
Across the Channel, there are concerns about the upcoming polls in France, which President Emmanuel Macron called after his party lost out to the far-right National Rally (RN) in EU-wide elections a week ago. The move has fanned fears about instability in Europe’s second-biggest economy, and observers said France could be on course for a standoff with the EU if extremists win.
“Uncertainty over the extent to which the far right RN party will have effective control of the next French parliament after July 7 will be an ongoing source of market angst,” said Ray Attrill at National Australia Bank.
Worries about the election hammered Paris’ CAC 40 index last week, pushing it down more than two percent Friday and six percent over the week, which weighed on other European bourses.
The head of the European Central Bank, Christine Lagarde, said Monday in response to questions on the negative market fallout from French political gyrations that the body was “attentive to the proper functioning of financial markets.” Lagarde stressed her aim to see inflation brought back down to the ECB’s two percent target as “price stability is of course understood in parallel with financial stability.”
Paris’s CAC40 index was up 0.7 percent in afternoon trading while Frankfurt advanced 0.3 percent while London edged into the red.
The dollar gained ground, meanwhile, which Fawad Razaqzada, analyst at Forex.com, said was largely “thanks to elections uncertainty in France and rise of far-right parties across Europe”.
In Asia, Tokyo closed down nearly two percent as investors took a risk-averse stance and fresh data fuelled worries about the US economy.
Investors sold down Tokyo shares on worries about French politics, concerns about the US economy and uncertainty over the Bank of Japan’s policy outlook, analysts said.
“Investors are conscious of slowdown concerns surrounding the US economy” following data last week showing a fall in consumer sentiment, noted IwaiCosmo Securities.
“Political uncertainty in Europe was also shrinking investors’ spirit,” the brokerage said.
– Key figures around 1400 GMT –
New York – Dow Jones: DOWN 0.2 percent at 38,515.75
New York – S&P 500: DOWN 0.1 percent at 5,426.69
New York – Nasdaq: FLAT at 17,692.87
Paris – CAC 40: UP 0.7 percent at 7,555.28 points
Frankfurt – DAX: UP 0.3 percent at 18,067.81
EURO STOXX 50: UP 0.6 percent at 4,866.60
London – FTSE 100: DOWN 0.1 percent at 8,139.13
Tokyo – Nikkei 225: DOWN 1.8 percent at 38,102.44 (close)
Hong Kong – Hang Seng Index: FLAT at 17,936.12
Shanghai – Composite: DOWN 0.6 percent at 3,015.89 (close)
Euro/dollar: UP at $1.0715 from $1.0708 on Friday
Euro/pound: UP at 84.58 pence from 84.38 pence
Dollar/yen: UP at 157.90 yen from 157.37 yen
Pound/dollar: DOWN at $1.2669 from $1.2689
West Texas Intermediate: UP 0.3 percent at $78.70 per barrel
Brent North Sea Crude: UP at $82.84 per barrel
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© 2024 AFP
