European Markets Show No Clear Trend on Monday with London and Wall Street Closed

MARKET REVIEWS. European stock markets did not show a clear trend on Monday, in a lifeless and sluggish session with the London and Wall Street stock exchanges closing for a public holiday.

After opening higher thanks to the outcome on Sunday of an agreement to raise the debt ceiling of the United States, the momentum did not hold and the European indices stalled.

Stock market indices at 7:45 a.m.

Paris added 0.1% and Frankfurt 0.2% at the start of the session in Europe

In New York, before the markets open, the average Dow Jones of industrial stocks and the broader index S&P 500 increased by 0.3%.

In Asia, the Nikkei 225 added 1% in Tokyo. The scholarship of Shanghai advanced by 0.3% and the Hang Seng plunged 1% in Hong Kong. Sydney took 0.9%.

On the New York Commodity Exchange, the price of oil added 14 cents to US$72.81 a barrel.

The context

The absence of British and American investors should cause a reduction in trading volumes, which may amplify the variations.

In Asia, it was above all Tokyo that benefited from this agreement and gained 1.03%. Hong Kong lost 0.68% in the latest trade and Shanghai gained 0.28%.

US President Joe Biden and Republican leader Kevin McCarthy reached an agreement over the weekend to raise the US public debt ceiling for two years and thus avoid a cataclysmic default.

“The agreement avoids the worst possible crisis: a payment default for the first time in the history of our country, an economic recession, devastated retirement savings accounts, millions of jobs lost”, argued the Democratic president.

But the agreement must receive the approval of a divided Congress and is already the subject of a revolt of elected progressives and conservatives, some speaking of a “capitulation”.

“Overall, the deal is more of a victory for Biden and the Democrats because it contains relatively limited budget cuts,” said political scientist Nicholas Creel.

“There is always a chance, however slim, that hard-line Republicans could undermine McCarthy’s efforts,” warns SPI Asset Management analyst Stephen Innes.

This draft agreement nevertheless alleviates a subject of concern for investors who should “refocus on the myriad of concerns that have been pushing them to be cautious for more than a year”, and in particular the expectations around the monetary policy of the US central bank, the Fed, and US economic statistics, according to Stephen Innes.

Inflation in the United States, which had been slowing for several months, started to rise again in April, both over one year and over one month, according to the PCE index published on Friday and favored by the Federal Reserve (Fed).

The higher-than-expected inflation figures “suggest that the Fed may not have yet completed its cycle of raising interest rates.”

On the bond market, sovereign interest rates are stable.

Erdogan re-elected in Türkiye

The indestructible head of state Recep Tayyip Erdogan claims victory in the presidential election in Turkey in which he won more than 52% of the votes, according to results covering more than 99.85% of the ballots of the second round.

The index ARE 30 of the Istanbul Stock Exchange rose by 2.28%.

The turkish lira was penalized by President Erdogan’s policy of maintaining very low interest rates despite very high inflation. It was still losing ground (-0.41%) against the dollar at 20.06 Turkish liras for one US dollar.

SoftBank Group boosted by future ARM IPO

The title of the Japanese giant of investments in new technologies SoftBank Group climbed 8.19% in Tokyo ahead of the Wall Street listing by the end of the year of its subsidiary, the British microprocessor maker ARMwhile the semiconductor sector is buoyed by the enthusiasm for the development of artificial intelligence.

Borussia Dortmund receives a red card

German football club action Borussia Dortmund plummets 29% in Frankfurt after the club let slip the title of first division champion (Bundesliga) on Saturday, in favor of Bayern Munich.

Commodities and Currencies

Oil prices are rising. The barrel of Brent de Mer du Nord gained 0.73% to US$77.51 and a barrel of American WTI 0,87% à 73,30 $US.

Iro gained 0.10% against the greenback at US$1.0734 for one euro.

The bitcoin gains 1.39% to US$27,950.