Stock market decline worsens in Europe with crisis in France and negative contagion on Wall Street
The crisis on European stock markets was not temporary. After the MSCI index for the euro zone fell 0.65% on Monday, the slide intensified this Tuesday, with a drop of 1.1%. A combination of negative factors is affecting investor confidence. The index of the 50 main listed companies in the euro zone fell even further this Tuesday: the Eurostoxx 50 slipped from 0.7% to 1.04%.
In addition to the French political crisis caused by the victory of the extreme right in the elections for the European Parliament and by the call for early legislative elections for the end of June by President Macron, they joined Christine Lagarde’s statements pouring cold water on the expectations of those who expected a certain cycle of interest rate cuts this year by the European Central Bank and the probability that the North American Federal Reserve (Fed) will only decide a first cut in September. The two North American stock exchanges are reacting negatively this Tuesday and affected the final part of the stock market session in Europe. The Fed announces its decision on interest rates on Wednesday and reveals its decision makers’ projections for the path of interest rates until the end of the year.
Lisbon, which, on Monday, had gone almost unnoticed, with the PSI index (of the 16 main listed companies) falling marginally by 0.11%, became the third most important drop this Tuesday in Europe. The PSI fell 1.41%, below the loss leaders in Milan (MIB index lost 1.91%) and Madrid (Ibex 35 index fell 1.6%). The Paris stock exchange, which, on Monday, led the falls in Europe by far, closed this Tuesday, falling 1.33%, a break close to that of the previous day (drop of 1.35%). The biggest setbacks in Paris-listed companies were registered at BNP Paribas and Vinci, with drops of almost 4%.
The New York stock exchanges have not yet closed and the trajectory is one of losses on Wall Street, with the Dow Jones and S&P 500 indices in negative territory, and the Nasdaq resisting in positive territory.
