World stocks rise as EU vote avoids worst case scenarios

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 0.5% to close at 12,071.18, while the CAC 40 in France added 0.4% to 5,336.19 and Britain’s exchange remained closed for a bank holiday. Markets in the United States were also closed, for the Memorial Day holiday.

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 where 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.

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 Donald 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.

“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. He said via Twitter that 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.

The 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.

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.

ENERGY: Benchmark U.S. crude rose 20 cents to $58.83 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 36 cents to $68.33 per barrel.

CURRENCIES: The dollar rose to 109.53 Japanese yen from 109.31 yen on Friday. The euro edge up to $1.1193 from $1.1190.

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