How Global Markets are Moving
Stock Markets Edge Higher, Oil Climbs
French Political Instability
Stock markets edged higher on both sides of the Atlantic on Monday, despite fading hopes for US interest rate cuts and worries about political upheaval in Europe. Meanwhile, oil prices rose.
European Markets
- Eurozone Stocks: Finished higher.
- London's FTSE 100: Dipped into the red.
"European markets have risen off the lows of last week but there’s little enthusiasm among investors for the region given the prevailing political uncertainty," said Chris Beauchamp, chief market analyst at IG.
French Political Instability
President Emmanuel Macron called an early general election after his party lost out to the far-right National Rally (RN) in EU parliament elections. This has increased fears about instability in France, Europe's second-biggest economy. Observers worry about a potential 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.
- Paris' CAC 40 Index: Closed up 0.9% higher on Monday after falling more than 6% last week.
Christine Lagarde, head of the European Central Bank (ECB), addressed concerns over the negative market fallout from the early French election. She emphasized the ECB's commitment to maintaining financial stability while aiming to bring inflation back down to its 2% target.
UK Markets
- London Stocks: Ended the day down less than 0.1%.
The Bank of England is expected to maintain interest rates on Thursday, ahead of the UK elections on July 4. The cost-of-living crisis is a significant factor potentially leading to a defeat for the ruling Conservatives.
US Markets
On Wall Street, the three main indices edged higher in midday trading after opening lower, as investors anticipate more data to gauge the timing of an interest rate cut by the US Federal Reserve.
"Retail sales data tomorrow could give some clues to the market over the health of the US economy and the timing of Fed rate cuts," said City Index analyst Fiona Cincotta.
With US inflation cooling more slowly than expected, the Fed signaled last week that it expects to make one interest rate cut this year. "Consumer spending has been an area of focus for Wall Street as the market gauges the impact of higher interest rates on the economy," added Cincotta.
Asian Markets
In Asia, Tokyo closed down nearly 2% as investors adopted a risk-averse stance, with fresh data fueling concerns about the US economy.
"Investors are conscious of slowdown concerns surrounding the US economy" following data last week showing a fall in consumer sentiment, noted IwaiCosmo Securities.
Oil Prices
Oil prices rose more than 1% despite weaker-than-expected economic data out of China.