London (AFP) – Stock markets mostly advanced Tuesday as a drop in US retail sales raised hopes that the Federal Reserve would have room to cut interest rates later this year.
Traders also kept an eye on developments in France, with fears growing that a snap legislative election called by President Emmanuel Macron could see the far right succeed and cause political turmoil in the European Union.
The French situation has helped the London Stock Exchange reclaim from Paris the title of Europe’s biggest stock market by valuation.
The mood on trading floors was generally upbeat after the S&P 500 and Nasdaq chalked fresh record closes Monday thanks to continued buying of tech titans including Apple, Intel and Microsoft owing to optimism over artificial intelligence.
London, Frankfurt and Paris all ended in the green though on Wall Street there was little movement early in the session, with the Dow and the broad-based S&P 500 barely extending gains while the tech-heavy Nasdaq was just off.
US retail sales came in below expectations for a second straight month in May as gas station revenues fell sharply, according to official data.
The report suggests consumers are spending less than expected, a good sign for the Federal Reserve as it continues its fight to bring inflation down to its long-term target of two percent by keeping interest rates higher.
“This report could be just what investors and the Fed wanted to see — another sign that demand is cooling off but not turning ice cold,” said Bret Kenwell, US investment analyst at the trading platform eToro.
The figures are “a good thing for the Fed and those who are looking for rate cuts later this year”, Kenwell said.
Separate figures showed that US factory output beat expectations to rise sharply in May.
Asian investors extended the buying, with Tokyo and Taipei closing up more than one percent and Shanghai, Sydney, Singapore, Mumbai, Bangkok, Seoul and Wellington also ending higher, though Hong Kong reversed early gains to fall into the red.
In Europe, Frankfurt and Paris extended Monday’s advance after a sell-off last week fuelled by the political uncertainty in Europe and London added 0.6 percent, with investment firm Hargreaves Lansdown surging 5 percent on a takeover proposal from private equity buyers worth 5.4 billion pounds ($6.8 billion).
Investors brushed aside data Tuesday showing that German investor confidence rose less than expected in June after Europe’s top economy saw an uptick in inflation following months of decline.
The ZEW institute’s closely watched economic expectations index edged up to 47.5 points from 47.1 points in May, below the 49.5 points expected by analysts surveyed by FactSet.
Axel Rudolph, senior market analyst at the online trading platform IG, said the European gains came as “bargain hunters entered the fray, even though trading volumes are light ahead of the US Juneteenth holiday on Wednesday”.
He noted those gains came in the context of US retail sales rising less than expected and US industrial output rising more than forecast, and despite the disappointing data on German investor morale.
– Key figures around 1740 GMT –
New York – Dow Jones: UP 0.1 percent at 38,793.59 points
New York – S&P 500: UP 0.1 percent at 5,480.52
New York – Nasdaq: DOWN 0.1 percent at 17,845.87
London – FTSE 100: UP 0.6 percent at 8,191.29 (close)
Paris – CAC 40: UP 0.8 percent at 7,628.80 (close)
Frankfurt – DAX: UP 0.4 percent at 18,131.97 (close)
EURO STOXX 50: UP 0.6 percent at 4,915.47 (close)
Tokyo – Nikkei 225: UP 1.0 percent at 38,482.11 (close)
Hong Kong – Hang Seng Index: DOWN 0.1 percent at 17,915.55 (close)
Shanghai – Composite: UP 0.5 percent at 3,030.25 (close)
Euro/dollar: UP at $1.0739 from $1.0738 on Monday
Euro/pound: UP at 84.63 pence from 84.49 pence
Dollar/yen: UP at 157.87 yen from 157.72 yen
Pound/dollar: DOWN at $1.2690 from $1.2706
West Texas Intermediate: UP 1.4 percent at $81.44 per barrel
Brent North Sea Crude: UP 1.1 percent at $85.15 per barrel
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© 2024 AFP
