LONDON: European and Asian stock markets traded mixed Monday following a pre-weekend retreat on Wall Street as investors scaled back bets on US interest-rate cuts, fearing Donald Trump’s policies could reignite inflation.
Global equity markets have cooled since Trump’s US election win this month, while investor attention has turned to his upcoming pick for Treasury secretary.
All three main indices on Wall Street ended deep in the red Friday, with the Nasdaq down more than two percent, after Federal Reserve boss Jerome Powell signalled a slower pace of interest rate cuts.
US inflation is proving sticky even before any potential uplift to prices once Trump re-enters the White House.
The dollar was mixed against main rivals Monday.
The Fed’s next policy decision in December will be closely followed for an idea about officials’ plans.
Europe’s STOXX 600 opens lower as tech, healthcare shares drag
“Although the markets are still pricing in a cut for December, the rate of reductions for next year has now slowed significantly,” said Richard Hunter, head of markets at Interactive Investor.
Expectations that a second Trump administration will impose painful fresh tariffs on Chinese goods has added to the unease and ramped up fears of another trade war between the economic powerhouses.
“It is likely that if Trump does proceed with tariffs on Chinese goods, they will respond aggressively,” said Kathleen Brooks, research director at traders XTB.
European markets struggled for direction Monday before eurozone and UK inflation data this week which will help gauge the outlook for local interest rates.
The vice president of the European Central Bank said Monday that Trump’s spending plans risked inflating the US government’s budgetary deficit and spreading worries on markets.
“Trade tensions could rise further,” with resulting risks for economic activity, Luis de Guindos noted.
Eyes this week will be on also the release of flash purchasing managers’ index data for signals about the health of business activity in the eurozone, Britain and United States.
Friday’s PMI data “may capture some of the initial sentiment impact from around the world regarding Trump’s victory,” said Jim Reid, economist at Deutsche Bank.
“Europe will be especially interesting on this front as the continent awaits their trade fate,” he added.
In Asia on Monday, Tokyo and Shanghai stock markets closed lower and Hong Kong rose.
Shares in Hong Kong were helped by hopes for more Chinese stimulus after a recent raft of measures, while a call by authorities for firms to step up efforts to boost shareholder returns also provided support.
Bitcoin sat around $91,900, having hit another record high of $93,462 last week on hopes Trump would push for more deregulation of the crypto market.
Dealers were awaiting the release of earnings from chip titan Nvidia Wednesday, after the US firm led a tech surge this year owing to an explosion in demand for all things linked to artificial intelligence.
Key figures around 1100 GMT
London – FTSE 100: UP 0.3 percent at 8,086.21
Paris – CAC 40: FLAT at 7,271.54
Frankfurt – DAX: FLAT at 19,204.53
Tokyo – Nikkei 225: DOWN 1.1 percent at 38,220.85 (close)
Hong Kong – Hang Seng Index: UP 0.8 percent at 19,576.61 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,323.85 (close)
New York – Dow: DOWN 0.7 percent at 43,444.99 (close)
Euro/dollar: UP at $1.0547 from $1.0536 on Friday
Pound/dollar: UP at $1.2621 from $1.2611
Dollar/yen: UP at 155.04 yen from 154.32 yen
Euro/pound: UP at 83.54 pence from 83.52 pence
Brent North Sea Crude: UP 0.8 percent at $71.59 per barrel
West Texas Intermediate: UP 0.7 percent at $67.46 per barrel
American Dollar Exchange Rate