Market Analysis

European Stocks Tumble Following European Vote and Surprising French Election

Amos Simanungkalit · 10 Jun 202412.7K Views

European stock markets experienced declines on Monday following the results of the European Parliament elections, which saw gains for nationalist and eurosceptic parties. As of 03:10 ET (07:10 GMT), Germany's DAX index was down by 0.8%, France's CAC 40 dropped 1.9%, and the UK's FTSE 100 fell 0.7%.

The election outcomes, which tilted towards the right, prompted French President Emmanuel Macron to announce snap legislative elections later this month after strong showings by eurosceptic parties like Marine Le Pen's far-right group. This shift may lead to a more polarized European Parliament, potentially complicating EU legislative efforts on issues ranging from climate policy to defense strategy.

Investor sentiment was also influenced by anticipation of the upcoming Federal Reserve meeting where policymakers are expected to maintain interest rates. However, there is speculation that the Fed may revise down its projections for rate cuts this year. Currently, futures markets suggest around 36 basis points of easing priced in for 2019, with uncertainty surrounding a possible cut in September.

Additionally, the European Central Bank recently lowered interest rates as anticipated, prompting interest in whether further cuts are likely later in the year.

In corporate news, Ashtead's (LON) stock saw a modest increase of 0.8% following reports that the UK-based industrial equipment provider is considering relocating its listing to the U.S. due to concerns about valuation discrepancies compared to its American competitors.

Meanwhile, oil prices rose slightly on Monday after three consecutive weeks of losses, ahead of key monthly reports from OPEC, the International Energy Agency (IEA), and the Federal Reserve meeting. As of 03:10 ET, U.S. crude futures (WTI) were up 0.2% at $75.67 per barrel, while Brent crude climbed 0.3% to $79.86 per barrel. Market attention remains on OPEC's upcoming report, which will provide insights into global oil demand trends amid plans to ease production cuts from October onward.