European markets are mostly lower for the week as political uncertainties continue to weigh on sentiment. The selloff in the French stock markets resumed ahead of the parliamentary election.
Political uncertainties continued to weigh on market sentiment in Europe, with most regional stock markets heading for a negative close this week. On the other side of the Atlantic, Wall Street extended its upward momentum amid a rally in tech stocks. Meanwhile, equities across Asia are mixed due to varying economic dynamics.
Europe
Most European benchmarks are lower in their weekly performance, with the Euro Stoxx 600 down 1.07%, the CAC 40 down 1.28%, and the FTSE 100 falling 0.70%. The DAX is the only index in positive territory, up 0.23% over the past five trading days. Equities in France and the UK are particularly under pressure ahead of the elections.
Consumer stocks underperformed after H&M reported weaker-than-expected quarterly earnings, with the company’s shares plunging 14% on Thursday. Over a five-day trading period, Nestle’s shares fell 2.68%, L’Oréal’s stocks were down 3.41%, and Unilever Plc’s shares slid 1.4%. Earlier in June, department store, Inditex, which owns Zara, also reported a slowdown in first quarter sales. The pressure on consuming stocks suggests that high costs of living weighed on consumer spending. In contrast, the energy sector rebounded amid rising crude oil prices, with Shell’s share price up 3% and BP’s shares up 1.34% over the past five trading days. However, this may cloud global inflation outlooks.
Pharmaceutical stocks remained resilient, with Novo Nordisk’s shares surging to an all-time high on news that the company plans to invest $4.1 billion in a new US plant. On a weekly performance, shares of Europe’s largest drugmaker were up by 1.79%. Roche GS’ stocks are 0.12% higher compared to last week.
In addition, Airbus’ shares plunged 12% over the last five trading days after the aircraft manufacturer downgraded its outlook for 2024 due to supply chain disruptions. It dragged other industrial and defence stocks down, with Rolls Royce tumbling 5.2% and BAE Systems sliding 2.07% at the London Stock Exchange compared to last week.
In currencies, the euro continued to weaken against the US dollar due to the uncertain political landscape. The exchange rate of the euro against the greenback remained below 1.07 at a three-week low.
Wall Street
The US stock markets extended an upside momentum but at a slower pace. While the tech giants continued to fuel the rally on Wall Street, other sectors gained little amid expectations of “higher-for-longer” interest rates. Over five trading days, the Dow Jones Industrial Average was slightly up by 0.04%, the S&P 500 rose 0.33%, and the Nasdaq climbed 0.93%.
At a sector level, only three out of eleven sectors posted gains from a week ago, with the telecommunication sector leading the way, up 2.22% from last week, driven by Alphabet and Meta Platforms, up 5.2% and 3.6%, respectively. The consumer discretionary sector also outperformed, climbing 1.51% on a weekly basis, buoyed by Amazon and Tesla, rising 6.31% and 8.73%, respectively. Amazon’s shares reached a new high on the AI-fuelled rally, with its market cap topping $2 trillion for the first time in history.
The energy sector resumed gains, up by 0.65% over the past five trading days amid two-month high oil prices.
On the other hand, consumer staples, technology, industrial and utilities were the laggards, all down more than 1%. Profit-taking in Nvidia was the biggest contributor to the slide in the tech sector.
Investors will keep an eye on the US personal consumption expenditure (PCE) data later today, gauging the country’s inflation trajectory.
Asian Markets
Asian markets are heading for a mixed close for the week, with the Japanese Nikkei 225 up 3.13%, the Australian ASX 200 flat, and the Chinese Hang Seng Index down 1.72% over the last five trading days at 3:58 am CEST.
Australia’s annual inflation printed at 4% in May, hotter than the expected 3.8% and remaining elevated for three months in a row. This raises concerns that the Reserve Bank of Australia will hike its Official Cash Rate in its next meeting in August, following five consecutive pauses.
The Japanese stock markets hit a two-month high as the Japanese Yen tumbled to a new 28-year low against the US dollar, with the exchange rate rising to above 161 Yen for one dollar. Chinese stock markets extended weakness amid rising trade tensions with other major economies like the US, the EU, and Canada.
