Global Markets: European and Asian Exchanges Surge

On European exchanges, stock prices surged on Monday morning following last week’s decline, with all sector indices rising.

STOXX 600 index of leading European stocks was up 1.7 percent at 9:30 AM, recovering last week’s losses. This morning, the London FTSE index strengthened by 1.55 percent to 8,087 points, while the Frankfurt DAX rose by 1.98 percent to 20,777 points, and the Paris CAC increased by 1.87 percent to 7,237 points.

Stock prices rose across all major sectors, with the highest increase in the oil sector, averaging 2.6 percent, followed by financial at 2.5 percent, and technology at 2.3 percent. Given the lack of significant news, this is primarily a correction of stock prices after a sharp decline over the past two weeks.

Asian exchanges also saw stock prices rise. MSCI index of Asia-Pacific stocks was up 1.6 percent at 9:30 AM, after losing 4 percent last week. This morning, the Japanese Nikkei index strengthened by 1.9 percent, while stock prices in Shanghai, South Korea, Australia, and Hong Kong rose between 0.9 and 2.2 percent.

The prices of technology companies’ stocks rose the most as U.S. President Donald Trump temporarily exempted 20 technology products from tariffs on imports from China. However, this will be short-lived as the White House indicated that these electronic devices are merely being moved to a different tariff category. Tariffs on semiconductors will be announced this week, and soon on smartphones.

This introduction and subsequent postponement of tariffs confuse investors and management, which, analysts say, will negatively impact economies.

– The basic tariff of 10 percent on all imports is already very high, and the total tariffs on imports from China of 145 percent are prohibitive. You cannot stop trade between the two largest economies in the world and not expect damage. We estimate that the likelihood of recession in the U.S. and globally is 60 percent, says Bruce Kasman, director at JPMorgan.

U.S. futures indices also indicate significant stock price increases on Wall Street today.

On the Zagreb Stock Exchange, cautious trading is expected on Monday, as investors will monitor developments on global exchanges, and the Crobex index may stagnate after managing to finish in the positive last week amid significant fluctuations. Among analysts participating in a Hina survey, one expects an increase in Crobex today, while the others anticipate stagnation.

Dollar Stagnates, Oil Prices Fall

On the currency markets, the value of the dollar against a basket of currencies remains stagnant at its lowest level in three years. The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 99.70 points this morning, down from 99.78 points on Friday evening.

The exchange rate of the U.S. dollar against the Japanese yen slipped from 143.50 to 143.00 yen.

The U.S. currency has also weakened against the euro, with the price of the euro reaching 1.1375 dollars, compared to 1.1355 dollars on Friday evening.

Oil prices, on the other hand, have fallen. The price of a barrel on the London market slipped 0.32 percent to 64.55 dollars, while on the U.S. market, a barrel decreased by 0.33 percent to 61.30 dollars.