LONDON: European stock markets were higher on Wednesday as the market braced for a French election and a key US inflation reading, while the yen lurked just shy of 160 per dollar level, keeping traders on alert for possible intervention.
Risk sentiment in Europe was broadly positive after a rebound in Nvidia shares on Tuesday, following three straight days of selling, and as investors focus on the monetary policy outlook and the prospect of further rate cuts.
“Fears of a big imminent market wobble are now receding,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Markets are still sensitive to risks before the first round of voting in the French legislative election on Sunday, but remained focused on monetary policy where further interest rate cuts from the European Central Bank this year seem likely.
“The key driver for markets today is all around central banks and a close second is political uncertainty,” said Nathan Sweeney, chief investment officer of multi-asset at Marlborough.
“If you think about Europe in general, the ECB has started the rate-cutting journey. Companies are very sensitive to interest rates so it can really help to bolster their earnings.”
The pan-European STOXX 600 was last up 0.5% to its highest level since June 13, shortly after French President Emmanuel Macron announced the snap election.
France’s CAC 40 was up 0.4%, Germany’s DAX gained 0.9% and Britain’s FTSE 100 rose 0.6%.
European stocks fall as Nvidia slump hits tech sector
Money market traders are pricing in around 45 basis points of further easing from the ECB this year, implying almost two more quarter-point rate cuts, following a 25 bps move earlier this month.
ECB policymaker Ollie Rehn said bets for two more rate cuts this year were “reasonable”.
US equity futures edged higher, while MSCI’s broadest index of Asia-Pacific shares outside Japan crept up to 567.86, just shy of the two-year high of 573.38 it hit last week.
American Dollar Exchange Rate