Global stock markets are mostly higher for the week as expectations for central banks to lower interest rates strengthened, while fears of European political disruptions diminished.
Risk-on sentiment resumed in European stock markets this week as the potential outcome of the French election appears to be less disruptive. Across the Atlantic, Wall Street extended its record-breaking momentum due to growing expectations for the Federal Reserve to commence rate cuts sooner. Asian markets also posted positive weekly performance, following global trends.
Europe
All European benchmarks experienced a sharp rebound this week as the first round of the French election indicated that the far-right party may not achieve an absolute majority to take over legislative power in parliament, which caused a relief rally in stock markets across the continent. Additionally, exit polls from the UK election show that the Labour Party is projected to win a landslide victory, which also favoured British markets.
On a weekly performance, the Euro Stoxx 600 rose 0.81%, the CAC 40 jumped 2.19%, the DAX climbed 1.33%, and the FTSE 100 was up 0.75%.
At a sector level, banking and green energy stocks saw the sharpest rebounds in the French markets, with BNP Paribas up 5.74%, Total Energies jumping 5.91%, and Credit Agricole rising 4.27% in the past five trading days. The industrial sector also outperformed, with Airbus up 3.11% and 0Safran climbing 2.71% from last week.
Mining and energy stocks were also strong due to rising metal and oil prices. Shell’s shares were up 4.54%, BP’s stocks rose 3.88%, and Rio Tinto climbed 2.25% on a weekly basis.
On the other hand, consumer stocks and the luxury consumer sector extended losses due to weak global demands. LVMH slid 0.94%, Hermes lost 3.33%, and L’oreal shed 6.72% over the past five trading days.
Additionally, the semiconductor equipment manufacturer ASML reached an all-time high during the week, as the AI boom continued to fuel the global tech rally. However, the largest European company, Novo Nordisk’s shares saw a retreat by 2.9% over a five-day trading period after hitting a record high last week.
The euro strengthened against the US dollar, rising by 0.6% from last week to above 1.08, influenced by the less disruptive French election projection. The single currency also firmed against the Swiss franc for the third consecutive week after the Swiss National Bank cut the interest rate for the second time in June.
Wall Street
The US stock markets are likely to extend the fifth weekly gain as the tech rally continues to fuel the momentum. The S&P 500 closed above 5,500 for the first time in history. Over the last five trading days, the S&P 500 rose 0.99%, and the Nasdaq climbed 1.85%. the Dow Jones Industrial Average was up by 0.37%.
At a sector level, five out of eleven sectors posted gains from a week ago, with the technology sector leading the charge, up 2.52%. The consumer discretionary and financial sectors also outperformed, advancing 2.33% and 2.01%, respectively, over the past five trading days. In contrast, Materials, Consumer Staples, and Healthcare were the biggest laggards, down 0.77%, 1.07%, and 1.84% from last week.
Tesla’s shares soared nearly 25% from last week after the company reported a smaller-than-expected drop in its car deliveries during the second quarter. On a weekly basis, other mega-cap companies also performed well, with Apple up 3.48%, Nvidia rising 3.46%, Microsoft climbing 1.75%, and Alphabet advancing 0.22%. Meta Platforms fell 1.85% and Amazon slipped 0.13%.
Expectations for the Fed to lower the interest rates strengthened due to recent softened US economic data, particularly in the labour market. The upcoming non-farm payroll data will be critical for sentiment and shape the market trend today when trading resumes after the Independence Day holiday.
Asia Pacific
Most stock markets across the Asia Pacific are heading for a positive close this week, buoyed by global trends. The Japanese stock markets were particularly strong as the Japanese Yen continued to weaken against global peers. The Yen weakened against the US dollar to the lowest since 1986 due to wide spreads between the Japanese government bonds and the US Treasury notes. Although the Bank of Japan warned of an exchange rate intervention, markets continued to favour the much higher yielder currencies. The Japanese benchmark index, the Nikkei 225, is up more than 4% on a weekly performance, inching closer to its all-time high in March.
Australia’s stock markets resumed gains this week, led by mining and energy stocks. The ASX 200 is up 0.93% during five trading days. A softened US dollar lifted commodity prices and boosted shares of major miners and energy producers, with BHP up 3.78%, Rio Tinto rising 3.04%, Fortescue Metal advancing 4.53%, and Santos jumping 5.96% from a week ago.
Chinese stock markets are also performing resilient this week despite ongoing trade tensions with Europe and the US. The Hong Kong markets are heading for a positive close this week, with the Hang Seng index up 1.8% weekly by Thursday. The Chinese EV makers’ shares are particularly strong as the EU’s new tariffs do not seem to significantly impact the sector’s export profitability.
