Stocks Edge Higher in Wake of European Elections
27 May 2019 - 10:17AM
Dow Jones News
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 0.5% in the
opening minutes of trading. 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 rose 1.4%, while the smaller-cap Shenzhen rose 2.5%. Hong
Kong's Hang Seng traded 0.2% lower and Japan's Nikkei gained
0.3%.
Financial markets in the U.S. and U.K. were closed Monday for
holidays.
Italy's FTSE MIB index traded 1.1% higher, driven by Fiat
Chrysler shares, which were up nearly 20% after the
Italian-American car maker unveiled a proposal to merge with
France's Renault.
In the U.S., futures pointed to gains of 0.2% for the Dow Jones
Industrial Average and Nasdaq-100 and 0.1% 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.
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.
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 0.02%. In commodity markets, oil prices traded
largely flat. Brent crude fell 0.06% to $67.43 a barrel. Meanwhile,
gold prices rose 0.04% to $1,285.39 an ounce. Bitcoin futures rose
9.5% to $8,905, their highest level in over a year.
Write to Max Bernhard at Max.Bernhard@dowjones.com
(END) Dow Jones Newswires
May 27, 2019 05:02 ET (09:02 GMT)
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