Global markets experienced a modest uptick on Tuesday as investors awaited insights from multiple U.S. Federal Reserve officials, while the Australian dollar strengthened following the Reserve Bank of Australia’s decision to maintain interest rates amidst inflation concerns.
In Europe, the STOXX 600 share index rose 0.2%, with the French benchmark remaining flat amid a narrowing spread between German and French bonds. The euro held steady amidst stabilizing French assets, which had seen volatility last week due to political uncertainties surrounding upcoming parliamentary elections.
Lee Hardman, senior FX strategist at MUFG, noted, “Markets have been settling down after last week’s moves in French government bonds,” attributing the calm partly to statements from far-right leader Marine Le Pen expressing respect for institutions. Despite this, concerns over elevated political risk ahead of the elections continue to influence euro trading.
Meanwhile, in the U.S., both the S&P 500 and Nasdaq closed at record highs on Monday, buoyed by ongoing strength in technology stocks.
In France, Carrefour’s shares dropped significantly following reports of potential hefty fines related to its franchise network management, highlighting regulatory pressures impacting the retail sector.
Asian shares also showed gains, echoing Wall Street’s positive momentum from the previous session. MSCI’s world share index edged up 0.14%, approaching last week’s peak levels.
Jameson Coombs, economist at Westpac, commented, “Optimism over a resilient economy, improving corporate earnings, and potential rate cuts have bolstered equities,” countering concerns that the market rally is overly concentrated in large-cap tech stocks.
Looking ahead, central banks including those in Norway, Britain, and Switzerland are scheduled to announce their policy decisions this week. Expectations are for stable rates from Norway and Britain, while the Swiss National Bank is anticipated to implement a 25 basis points rate cut.
In the U.S., a busy day for Federal Reserve speakers is anticipated, offering further insights into future interest rate expectations following last week’s policy meeting. Market sentiment currently prices in approximately 45 basis points worth of Fed cuts for the remainder of 2024.
Later today, U.S. retail sales data will provide additional cues for market direction. The U.S. 10-year treasury yield remained steady at 4.29%, while the dollar showed strength against the euro, British pound, and Japanese yen.
Elsewhere, Brent crude futures eased by 0.46% to $83.87 per barrel, while spot gold dipped 0.3% to $2,312 per ounce amidst broader market stability.
The global market outlook remains cautious yet optimistic, with attention focused on economic data releases and central bank actions shaping investor sentiment in the days ahead.
