European stock markets rose yesterday as traders greeted a strong victory for President Emmanuel Macron’s centrist party in French parliamentary elections and Britain began formal Brexit talks.
London’s benchmark FTSE 100 index ended the day 0.8% higher at 7,523.81 points, while in the eurozone, Frankfurt’s DAX 30 index and the Paris CAC 40 gained 1.1% at 12,888.95 points and 0.9% at 5,310.72 points, respectively.
The EURO STOXX 50 ended 1.0 % up at 3,579.58 points.
“Equities have made a strong start to the new trading week.
Macron gaining a French parliamentary majority has been welcomed for Europe, as have delayed Brexit negotiations finally getting underway,” said Accendo Markets analyst Mike van Dulken.
Macron’s year-old Republique en Marche party won one of France’s biggest post-war majorities, strengthening his hand in implementing his programme of business-friendly reforms.
The euro edged higher against the dollar after his party and its allies won 350 seats in the 577-seat National Assembly, giving the president a strong mandate to enact business-friendly reforms.
However the currency slipped back somewhat amid mild disappointment that the party did not secure the forecast landslide.
Britain’s Brexit minister David Davis was meanwhile yesterday meeting Michel Barnier, the EU’s chief Brexit negotiator, kicking off hugely complex withdrawal negotiations that are expected to conclude within two years.
“A slightly softer form of Brexit now looks more likely than previously envisaged,” said analysts at Capital Economics, “but we doubt that the government will do a full U-turn on its Brexit stance”.
The Dow in New York extended early gains approaching midday in New York, with gainers including technology companies and US aerospace giant Boeing, which announced new orders at the Paris Air Show.
The dollar climbed above 111 yen yesterday after Japan posted a surprise trade deficit for May.
The Nikkei ended 0.6-percent higher, although troubled airbag maker Takata plunged 16.5% on reports it plans to file for bankruptcy and sell its assets to a US firm.
Oil prices were up slightly, off highs amid lingering glut concerns as US companies’ rising production offsets big output cuts agreed by Opec and Russia.
The Baker Hughes rig count showed another rise last week, Greg McKenna, chief market strategist at AxiTrader, pointed out in a client note.
“That’s 22 weeks in a row that oil rigs have been added, a record run,” he said, although he pointed out that the rate of new additions was easing.
“Even just a casual observance of the energy news would show that the conversation is turning a little from Opec and its production cut deal efficacy to US production and its sustainability — or growth — at these levels,” he added.
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