Global Markets: Cautious Trading on European Exchanges Ahead of French Elections

On European exchanges, cautious trading is taking place on Monday morning, with the most important indices recording only slight changes, while investors are focused on the French parliamentary elections, which will be held at the end of the week.

The pan-European Stoxx 600 index was unchanged at around 10:30 AM compared to Friday, at 515 points, with mining company stock prices falling the most, averaging 1 percent, while automotive industry stock prices rose the most, by 1.2 percent. Meanwhile, the Frankfurt DAX is up 0.22 percent, at 18,203 points, the London Ftse is up 0.02 percent, at 8,239 points, and the Paris CAC is up 0.17 percent, at 7,641 points.

Investor focus is on the first round of the French parliamentary elections this week, with polls showing a lead for the far-right party National Rally (RN) and its allies. New guidelines will also be monitored regarding the monetary policy decisions of the Swedish and Turkish central banks, as well as GDP data from Spain on Tuesday and Italy on Friday.

Among the biggest losers was the stock of German Zalando, which fell 6.7 percent after Morgan Stanley downgraded the rating of that stock. Conversely, the stock of Belgian pharmaceutical company Argenx rose the most, by 7.3 percent, as the US FDA approved Vyvgart Hytrulo, its drug for chronic inflammatory demyelinating polyneuropathy.

Asian Investors are also Cautious

On Asian exchanges on Monday, stock prices fell as investors are reluctant to take on riskier investments ahead of new news about inflation. The MSCI index of Asia-Pacific stocks, excluding Japan, was down 0.7 percent at 6:30 AM, after reaching a two-year high last week. This morning, the Japanese Nikkei index strengthened by 0.4 percent, while stock prices in Australia, Shanghai, South Korea, and Hong Kong slid between 0.7 and 1 percent.

Asian investors are cautious as stock indices on Wall Street lost some gains from the beginning of the week late last week. After a strong rise, which propelled the S&P 500 and Nasdaq index to their highest levels in history, stock prices of technology companies fell somewhat at the end of the week, causing indices to slip from record levels.

Additionally, hopes have faded that the US central bank will significantly lower interest rates this year as Fed leaders indicate they will not rush to cut rates, given that inflation in the US remains significantly above the target levels of 2 percent. Therefore, this week, new data will be in focus for investors to show whether inflationary pressures in the US are easing.

Reports on inflation in Australia and Japan will also be released this week.

Dollar Stable, Oil Prices Slightly Down

On the currency markets, the value of the dollar against a basket of currencies is stable. The dollar index, which shows the value of the US dollar against the other six major world currencies, is around 105.85 points this morning, roughly the same as Friday evening. Meanwhile, the exchange rate of the dollar against the Japanese currency slipped from 159.80 to 159.70 yen. Against the European currency, the dollar is stagnant, with the euro price hovering around 1.0695 dollars, the same as Friday evening.

Oil prices, on the other hand, have slightly fallen after rising about 3 percent last week. The price of a barrel on the London market weakened this morning by 0.15 percent, to 85.10 dollars, while on the US market, a barrel fell by 0.19 percent, to 80.55 dollars.