Advertisement

European stocks rise as EU supporters do well in election despite populist swell

A currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul on Monday.
(Ahn Young-joon / Associated Press)

Stocks rose in Europe on Monday, after a mixed day in Asia, as pro-EU forces retained a majority in the 28-nation bloc’s parliament despite the rise of nationalist parties in a region-wide vote.

Germany’s DAX climbed 0.4% to 12,061 and the CAC 40 in France added 0.2% to 5,326. With U.S. markets closed for the Memorial Day holiday, the futures contract for the Dow Jones industrial average edged 0.1% higher and that for the S&P 500 was nearly unchanged. Markets also were closed in Britain.

In the European election, far right and populist parties were among the biggest winners, as voters voiced concerns over immigration and security. Environmentalist parties also made strong gains, especially in Germany, at the expense of center-right and center-left groups that have dominated the EU. Despite their losses, pro-EU parties retained a majority in the European Parliament, easing concerns of a worst-case scenario in which nationalist parties foil policies for further EU integration.

“The deeply divided right-wingers will remain far away from wielding any significant power at the European level. They will not be able to block significant decisions,” said Holger Schmieding, economist at Berenberg bank.

Advertisement

Corporate news also supported markets. Shares in Fiat Chrysler and Renault jumped over 10% each after the Italian-American company on Monday proposed a merger with the French rival.

The deal would create the world’s third-biggest automaker and save billions needed to invest in the race to make new electric and autonomous vehicles. Renault said it would study the offer, and the French government, a key shareholder, sounded open to a deal.

Earlier, in Asia, Japan’s Nikkei 225 index advanced 0.3% to 21,182.58 after visiting President Trump said he expects a deal with Tokyo on trade after a Japanese election in July.

Trump’s administration has been seeking a bilateral trade deal with Japan after withdrawing from the Pacific Rim trading block, the Trans-Pacific Partnership. The two sides are working to close gaps over trade in farm products and autos and auto parts.

Advertisement

“We are working on the imbalance on the trade as there has been a tremendous imbalance so that we are working on that. And I am sure that will work out over a period of the time,” Trump said, adding via Twitter he expected an agreement in August.

Hong Kong’s Hang Seng dropped 0.2% to 27,288.09, and the Kospi in South Korea edged 0.1% to 2,044.21. The S&P ASX 200 in Australia edged 4.1 points lower to 6,451.90. he Shanghai Composite index jumped 1.4% to 2,892.38 and India’s Sensex added 0.8% to 39,752.63.

Share benchmarks have become more volatile as investors weigh the prospect of a prolonged trade war between the U.S. and China.

The 11th round of U.S.-China trade talks ended with no agreement. Instead, the U.S. moved to increase tariffs on Chinese goods, prompting China to reciprocate. The trade dispute escalated further after the U.S. proposed restrictions on technology sales to China.

Advertisement

Trump said last week that he expects to meet with his Chinese counterpart, Xi Jinping, at a summit next month in Japan. Both sides have expressed a willingness to resume negotiations, while at the same time ratcheting up antagonistic rhetoric, leaving investors confused about what happens next.

Benchmark U.S. crude lost 15 cents to $58.48 per barrel in electronic trading on the New York Mercantile Exchange. It climbed 1.7% to settle at $58.63 a barrel on Friday. Brent crude, the international standard, fell 98 cents to $67.71 per barrel. It gave up 3 cents to $67.47 per barrel on Friday.

The dollar rose to 109.48 Japanese yen, from 109.31 yen, on Friday. The euro edged up to $1.1193, from $1.1190.


Advertisement