Monday brought a dip in European stocks, as French assets suffered following president Emmanuel Macron’s triggering of a snap election in the wake of a significant defeat for his allies in EU parliamentary elections. France’s leading CAC 40 index saw a decrease of 1.4 per cent, reaching its lowest in over three months. This was driven by a decline in the shares of banks such as BNP Paribas, Societe Generale and Credit Agricole, which fell by 3.6 per cent to 7.5 per cent.
Meanwhile, in Dublin, the Iseq continued its downward trajectory started last week, dropping 1.2 per cent. Corporations contributing to this trend included Ryanair which saw a drop of 2.2 per cent, Smurfit Kappa down by 1.7 per cent and Kingspan, a producer of insulation, saw a 1.5 per cent decline. Food company Kerry also experienced a 0.5 per cent slip and Bank of Ireland registered a 1.1 per cent drop, all in the wake of the European Central Bank’s interest rate cut.
In London, the FTSE 100 closed with a slight decrease of 0.2 per cent, whilst the FTSE 250 dropped by 0.5 per cent, making this its second consecutive session of losses. It was a broadly negative day across UK sectors, with beverage stocks among those severely impacted, falling by 2.1 per cent. Energy stocks, however, gained by 1.2 per cent as oil prices climbed by $1 per barrel.
Individual company performance varied, with ME Group International recording a 4.9 per cent decline after the instant-service equipment company announced a full-year profitability in line with expectations. Conversely, M&G, the insurer and asset management company, managed to resist the broader market downturn with a 2.4 per cent increase after JP Morgan upgraded its rating. UK insurance company Aviva didn’t fare as well, slipping 1.7 per cent due to a downgrade by JPMorgan.
The Stoxx 600, a Europe-wide stock index, experienced a 0.3 per cent decrease, mirroring downturns in other regional markets such as Germany’s Dax and Spain’s Ibex, both sliding by 0.3-0.4 per cent.
Stock values of French motorway operators Eiffage and Vinci also saw significant drops, struggling with over 5 per cent decreases respectively. Aeroports de Paris, an airport group, and Engie, an energy company, weren’t far behind with respective decreases of 4.1 per cent and 3.2 per cent.
Most sectors also saw a downturn, with banks in the eurozone suffering the largest blow with a 1.6 per cent drop. The oil and gas sector, however, diverged from this trend showing a 0.9 per cent increase, likely due to rising crude oil prices.
French bond prices weren’t immune to these falling values, causing the yields on the 10-year note to skyrocket to six-month highs. This came in the wake of Eurosceptic nationalists making significant gains in the Sunday elections for European Parliament.
Across the pond in the US, the S&P 500 and the Nasdaq experienced gaining trends in the early trading hours, while the Dow remained stable. Investors were cautious ahead of a crucial inflation report and a Federal Reserve meeting, with hopes for insight into the future course of the central bank’s financial stimulus.
The S&P 500 managed to recover from initial losses while companies such as Microsoft, Amazon and Broadcom contributed largely to the Nasdaq’s slight upturn.
Nvidia, the chipmaker, saw a 1.1 per cent increase after a 10-for-one stock split which closed markets on Friday, fuelling speculation about its potential inclusion in the prestigious Dow.
Apple, however, fell by 0.8 per cent in advance of its annual developer conference, which is expected to provide updates on its integration of artificial intelligence capabilities.
On a more positive note, Southwest Airlines’ stock value surged by 8.6 per cent after Elliott Investment Management revealed a hefty investment of $1.9 billion in the company.
In contrast, video game retailer GameStop’s value plunged by 12.7 per cent, following a considerable 40 per cent drop on Friday. – Additional information was sourced from Reuters.