US Stocks Back at Records While European Bourses Retreat

AFP/APP

New York: Wall Street equity indices advanced to fresh records Tuesday as markets embraced commentary from Federal Reserve Chair Jerome Powell, while European bourses retreated on unease about upcoming French elections.

Both the S&P 500 and Nasdaq ended at all-time highs following Powell’s remarks at a panel discussion with other central bankers in Portugal where he noted pricing pressures have abated.

“We’ve made quite a bit of progress in bringing inflation back down to our target, while the labor market has remained strong and growth has continued,” Powell said. “We want that process to continue.”

Powell “said just enough to get the traders excited as he always does,” said Steve Sosnick at Interactive Brokers. 

“Powell most always tends toward the dovish side or typically says something neutral, but traders take the part that they like to hear.”But bourses in Paris and Frankfurt both retreated amid concerns about the potential economic fallout should the far right win power in France in weekend elections.

London was also lower and the pound traded mixed heading into a UK general election Thursday which the opposition Labour Party is expected to win. 

“Political concerns continue to weigh on European stocks,” noted Joshua Mahony, chief market analyst at Scope Markets. Fawad Razaqzada, market analyst at StoneX, noted that “the potential for (Marine) Le Pen’s National Rally party to govern France is a key risk one cannot ignore.”

Candidates in France on Tuesday faced a deadline to register for the runoff round of a high-stakes parliamentary election, as President Emmanuel Macron’s centrist camp and a left-wing alliance scrambled to prevent the far-right from taking power.

On Sunday, French voters go to polls for the decisive final round of the snap election Macron called after his camp received a drubbing in European elections last month. His gamble appears to have backfired, with the far-right National Rally (RN) of Marine Le Pen scoring a victory in the first round of voting last Sunday.

Ahead of the vote, official data Tuesday showed eurozone inflation cooled in June — but experts said it would be insufficient to convince the European Central Bank, or ECB, to accelerate its rate-cutting cycle despite sluggish economic growth.

In Britain, the main opposition Labor party is this week on course to end 14 years of power by the Conservatives and the premiership of Rishi Sunak. Elsewhere Tuesday, Asia’s main stock markets closed higher, with Hong Kong enjoying a rare surge after a recent run of losses. Tokyo piled on more than one percent to end above 40,000 points for the first time since April.