Stocks Edge Higher in Wake of European Elections

Date : 05/27/2019 @ 12:19PM
Source : Dow Jones News

Stocks Edge Higher in Wake of European Elections

By Max Bernhard 

Global stocks gained Monday after voters in European parliamentary elections showed broad but more fragmented support for pro-EU parties, while populist factions gained less ground than expected.

In Europe, the pan-continental Stoxx Europe 600 rose 0.3%. The euro was slightly higher against the dollar at $1.12 and German government bond yields, considered the benchmark in the region, were down slightly at negative 0.13%.

In Asia, markets were mixed, as President Trump talked trade with Prime Minister Shinzo Abe on his visit to Japan. The Shanghai Composite closed 1.4% higher, while the smaller-cap Shenzhen closed up 2.5%. Hong Kong's Hang Seng ended the day 0.2% lower and Japan's Nikkei up 0.3%.

Financial markets in the U.S. and U.K. were closed Monday for holidays.

Italy's FTSE MIB index traded 0.6% higher, driven by Fiat Chrysler shares, which were up 10% after the Italian-American car maker unveiled a proposal to merge with Renault. Shares in the French company traded 14% higher, while those in rival Peugeot were 3.1% lower.

In the U.S., futures pointed to gains of 0.05% for the Dow Jones Industrial Average and 0.01% for the Nasdaq-100, while pointing 0.01% lower for the S&P 500.

In Sunday's European parliamentary elections, the traditional coalition of conservatives and social democrats lost its majority, but together with liberals and greens, pro-EU groups will still hold a clear -- though more fragmented -- majority.

Euroskeptic and antiestablishment groups and parties increased their weight in EU policy-making, but gained less than expected.

Commerzbank chief economist Joerg Kraemer said it would get even more difficult to find majorities in the EU to pass policy reforms and negotiate trade deals.

"This will burden trade talks with the U.S., which will probably end up imposing car tariffs," he said.

Euroskeptics made significant gains in Italy, where Deputy Prime Minister Matteo Salvini's League Party was set to increase its presence from five to 24 seats. The result could embolden Italy to intensify the budget conflict with the EU, said Mr. Kraemer.

In Greece, where Prime Minister Alexis Tsipras called surprise snap national elections Sunday after his left-wing Syriza party suffered a defeat in the elections, 10-year government bonds yielded 3.12%, down from 3.34% on Friday, and the Athex composite traded 4.4% higher. The center-right New Democracy party is the strong favorite to gain power.

Italian 10-year government bonds yielded 2.58% Monday, down slightly from Friday. The spread over similar German government bonds, often seen as a barometer of eurozone cohesiveness, remained elevated at 2.68 percentage points.

Italian 10-year government bonds yielded 2.58% Monday, down slightly from Friday. The spread over similar German government bonds, often seen as a barometer of eurozone cohesiveness, remained elevated at 2.7 percentage points.

In the U.K., Nigel Farage's Brexit Party was projected to come in first with over 30% of the vote, according to partial results. The outcome could pressure the ruling Conservative Party as it chooses a new leader in the wake of Prime Minister Theresa May's planned exit. The pound was slightly higher against the dollar at $1.272.

The WSJ Dollar Index, which tracks the dollar against a basket of currencies, rose 0.1%. In commodity markets, oil prices traded largely flat. Brent crude fell 0.5% to $58.32 a barrel. Meanwhile, gold prices rose 0.1% to $1,286.35 an ounce. Bitcoin futures rose 9% to $8,875, their highest level in over a year.

Write to Max Bernhard at Max.Bernhard@dowjones.com

 

(END) Dow Jones Newswires

May 27, 2019 07:04 ET (11:04 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


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