European stocks stable post-French political ripples

European shares remained steady on Tuesday following losses in the previous session due to political uncertainties in France, with investor focus shifting to the US Federal Reserve’s monetary policy meeting.

The continent-wide STOXX 600 held flat at 521.90 as of 0834 GMT, while France’s CAC 40 index recovered slightly, gaining 0.2 per cent after a more than 1 per cent decline on Monday prompted by President Emmanuel Macron’s call for a snap election following disappointing results in European Union parliamentary elections.

However, the yield on the French 10-year bond surged to its highest level since November.

Mohit Kumar, chief economist Europe at Jefferies, expressed optimism about the European growth outlook despite the political uncertainty, stating, “Our view on the European growth picture has improved, and we do not think that the political uncertainty will change that view.”

The basic resources index led to sectoral declines, falling 1.6 per cent as base metal prices were impacted by a weaker yuan. Rio Tinto shares dropped 2.2 per cent after announcing its acquisition of Mitsubishi Corp.’s stake in Boyne Smelters for an undisclosed sum.

London’s FTSE 100 slipped 0.1 per cent due to weakness in mining stocks, despite signs of cooling in the domestic labour market in April.

Investor attention now turns to the Fed’s policy decision on Wednesday, which will provide insight into the timing of interest rate cuts in the US economy. Additionally, European Central Bank policymaker Francois Villeroy de Galhau reaffirmed the bank’s commitment to bringing inflation back to its 2 per cent target by next year.

In individual stock movements, Atos shares plummeted 11.1 per cent as the French tech group opted for a debt restructuring offer led by David Layani, resulting in significant dilution for existing shareholders. Conversely, UCB shares rose 3.3 per cent after receiving an upgrade from J.P. Morgan.

Naturgy’s shares tumbled 11.9 per cent after Criteria withdrew its takeover plan with TAQA for the Spanish gas firm. Spain’s IBEX index underperformed, declining 0.5 per cent compared to other European bourses.

Attribution: Reuters