Key Points
- Major European indices, including Paris, London, and Frankfurt, fell due to concerns over the upcoming French elections.
- President Macron’s centrist party is trailing behind the far-right National Rally (RN) and a left-wing alliance, increasing political uncertainty.
- Nasdaq and S&P 500 rose as Nvidia and other AI stocks recovered from recent losses; Dow Jones Industrial Average slightly declined.
- Nvidia shares bounced back after a significant drop, with analysts predicting strong profits despite the selloff.
- Investors are closely watching US economic indicators and the Fed’s plans for interest rates, with the PCE index release on Friday being crucial.
European stock markets experienced a downturn on Tuesday as renewed concerns over the upcoming French elections unsettled investors. In contrast, US tech stocks saw a recovery following a recent selloff led by the semiconductor giant Nvidia.
European Markets Slump
The major European indices, including Paris, London, and Frankfurt, were all in negative territory in afternoon trading. This decline was attributed to the political uncertainty surrounding the French legislative elections set for this Sunday, with a subsequent round on July 7.
President Emmanuel Macron called the snap polls after his centrist party suffered significant losses to the far-right National Rally (RN) in the recent European Parliament elections.
The latest opinion polls show the RN in the lead, followed by a left-wing alliance, with Macron’s centrist party trailing in third place.
Fiona Cincotta, an analyst at City Index, noted that “political uncertainty is deepening, which could limit the euro’s upside.”
US Tech Stocks Recover
Across the Atlantic, Wall Street’s tech-heavy Nasdaq and the broad-based S&P 500 rose in early trading, while the Dow Jones Industrial Average dipped slightly.
Nvidia shares rebounded after a 15 per cent drop from their recent high, with analysts attributing the previous selloff to market dynamics rather than fundamental issues.
Kathleen Brooks, research director at XTB trading platform, emphasised that Nvidia is still expected to report significant profits this quarter.
Adam Sarhan of 50 Park Investments pointed out that while some losses were expected after substantial gains in AI stocks this year, demand remains “exceptionally strong.” This resilience was evident as stocks like Carnival surged 6.5 per cent on strong demand forecasts, and Tesla rose 0.4 per cent despite a recall of its Cybertruck.
Focus on US Interest Rates
Investors are also closely monitoring the outlook for US interest rates. Despite robust economic data and a tight jobs market, there is uncertainty over the Federal Reserve’s plans, particularly regarding potential rate cuts later this year.
Attention is now on the release of the personal consumption expenditures (PCE) index on Friday, a key inflation gauge that could influence the Fed’s policy decisions.
Market Figures Around 1350 GMT
- New York – Dow: DOWN 0.2 per cent at 39,329.85 points
- New York – S&P 500: UP 0.2 per cent at 5,457.87
- New York – Nasdaq Composite: UP 0.6 per cent at 17,596.01
- London – FTSE 100: DOWN 0.3 per cent at 8,253.06
- Paris – CAC 40: DOWN 0.9 per cent at 7,635.86
- Frankfurt – DAX: DOWN 1.1 percent at 18,131.79
- EURO STOXX 50: DOWN 0.6 per cent at 4,921.49
- Tokyo – Nikkei 225: UP 1.0 per cent at 39,173.15 (close)
- Hong Kong – Hang Seng Index: UP 0.3 per cent at 18,072.90 (close)
- Shanghai – Composite: DOWN 0.4 per cent at 2,950.00 (close)
Currency and Commodity Markets
- Dollar/yen: DOWN at 159.59 yen from 159.63 yen on Monday
- Euro/dollar: DOWN at $1.0704 from $1.0740
- Euro/pound: DOWN at 84.40 pence from 84.61 pence
- Pound/dollar: DOWN at $1.2683 from $1.2689
- West Texas Intermediate: DOWN 0.5 per cent at $81.22 per barrel
- Brent North Sea Crude: DOWN 0.5 per cent at $85.57 per barrel
As political and economic uncertainties continue to influence market movements, investors remain vigilant, balancing between immediate reactions and long-term strategies.