Global stocks rise, Europe calmer by Reuters

By Alun John and Ray Wee

LONDON/SINGAPORE (Reuters) – Global stocks rose on Tuesday as uneasy calm continued in Europe and traders awaited statements from a group of Federal Reserve (US central bank) officials, while the Australian dollar rose after the central bank kept interest rates steady with its warning. From inflation.

The European stock index rose by 0.2%, with the French index stable, the gap between German and French bonds narrowed, and the euro stabilized.

This represents some stability after a sharp sell-off in French assets last week, as investors fear that President Emmanuel Macron’s surprise decision to call an early parliamentary vote will lead to a parliament dominated by the far right.

“Markets are starting to stabilize after last week’s moves in French government bonds and we received some comments from (far-right leader Marine) Le Pen saying she respects institutions,” said Lee Hardman, chief exchange market strategist at MUFG.

“But our view of the bigger picture has not changed. We believe the euro will continue to price in a higher political risk premium ahead of the election.”

The common European currency fell in recent trading by 0.1% against the dollar to $1.0722, although it was slightly higher than the pound.

The gap between French and German 10-year government bond yields – a measure of the risk premium over French government bonds – narrowed to 72 basis points after reaching 82.34 basis points on Friday, its highest level since February 2017.

Also in the French markets are shares in the supermarket group Carrefour (EPA:) fell as much as 9.6% after reports in French media that the Finance Ministry recommended a “record fine” be imposed on the company for managing its franchise network.

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“Optimism about a resilient economy, improving corporate earnings and the potential start of interest rate cuts supported stocks, defying concerns that the rally was concentrated in just a few big tech stocks,” Westpac economist Jameson Coombs said.

US and Nasdaq futures hovered on either side of stability on Tuesday.

Central banks

The Reserve Bank of Australia was the first to rise in a busy week for central banks. The European Central Bank kept interest rates at a 12-year high of 4.35 percent on Tuesday, as expected, but warned that there were still reasons to be vigilant in the face of inflation risks, and gave markets little sense of its future path.

In the latest trading, the Australian dollar was stable at 0.6609 US dollars.

“Uncertainty was once again a key theme in the (Reserve Bank of Australia) statement,” economists at the Commonwealth Bank of Australia (OTC) said.

“The result is that the Board is doing its best not to provide any forward guidance in light of the cross-currents in the economic data.”

Central banks in Norway, Britain and Switzerland are also scheduled to meet this week, with the central banks betting that interest rates will remain steady and the Swiss National Bank will provide another 25 basis points of easing.

In the United States, there are at least six Federal Reserve spokesmen on the agenda on Tuesday, and they could provide further clues about the outlook for US interest rates following the policy decision made last week.

Futures now point to roughly 45 basis points of Fed cuts scheduled for the rest of 2024.

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US retail sales are also scheduled to be released later in the day. The yield on ten-year US Treasury bonds was steady at 4.29%, and in addition to its rise against the euro, the dollar also rose against the British pound and the Japanese yen.

Elsewhere, oil prices fell, with futures down 0.46% to $83.87 per barrel.

Crude futures fell 0.3% to $2,312 an ounce. [GOL/]

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