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European and US stocks down as Wall Street turns attention to Fed

ftse U.S. Federal Reserve Chair Jerome Powell attends a press conference in Washington, D.C., the United States, on May 1, 2024. The U.S. Federal Reserve on Wednesday left interest rates unchanged at a 22-year high of 5.25 percent to 5.5 percent as recent consumer data indicates that inflation continued to tick up. (Photo by Liu Jie/Xinhua via Getty Images)
The FTSE and US stocks fell as traders look to the Federal Reserve's interest rate decision, as well as key inflation data later on in the week. (Xinhua News Agency via Getty Images)

The FTSE 100, European and US stocks dropped on Monday in London, while the euro weakened against the pound and dollar, as French president Emmanuel Macron called a snap election and the results of the EU election cast political uncertainty over the region. Meanwhile, US traders are looking to the Federal Reserve's interest rate decision, as well as key inflation data later on in the week.

  • The FTSE 100 (^FTSE) was 0.4% lower by the closing bell, while France's CAC (^FCHI) lost 1.8% — a three-month low — and the DAX (^GDAXI) in Germany was down 0.6%.

  • The pan-European Stoxx 600 (^STOXX) fell 0.5%.

  • The Dow Jones Industrial Average (^DJI) was down 0.3%, coming off a muted end to a winning week for the three major gauges. The S&P 500 (^GSPC) was almost flat and the tech-heavy Nasdaq Composite (^IXIC) each rose about 0.2%.

  • Stocks are moving cautiously after signs of strength in a mixed May non-farm payrolls report reinforced bets that the Fed will keep interest rates at a two-decade high for longer. Trader expectations for a cut in September have fallen, while those for November have risen, according to the CME FedWatch tool.

  • The euro fell almost 0.6% against the pound (EURGBP=X) to around 0.84, and 0.6% against the dollar (EURUSD=X) to around 1.07. The pound was the highest its been against the euro since summer 2022.

  • The moves come following EU election results showing voters moving to the right.

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    Head over to our US site for more market moving news.

  • Sentiment holding up despite macro concerns

    Chris Beauchamp, chief market analyst at online trading platform IG says:

    “Given the developments of recent days it is perhaps surprising that stock markets have not suffered heavier losses. But a booming US economy is ultimately good for stocks, and the shock of French elections may turn out to be a buying opportunity if Macron’s gamble pays off. Investors should be prepared for the Fed to err on the side of hawkishness this week, but not excessively so, and the bar to further rate hikes is still very high.”

  • JP Morgan taken by Labour's centrist atance

    A Labour win at the election would be a "net positive" for markets, according to JP Morgan with policies that are “modestly pro-growth, but crucially with a likely cautious fiscal approach”.

    “The current Labour party is occupying a centrist platform, and the perception of policy paralysis is set to move behind us," analysts wrote on Monday.

    “Labour agenda is modestly pro-growth, but crucially with a likely cautious fiscal approach. Our economists believe that, given the lack of fiscal space, Labour will likely focus on supply-side reforms to help improve economic growth.”

  • Taking the biscuit: the election

    The Sun has something a bit different today for the discerning digestive fan: charts showing voter intention stacked against biscuit preference.

  • Lib Dems roll out manifesto

    The Liberal Democrats have set out their election stall on Monday, with a host of promises for the NHS and social care.

    The pledges mean they would spend almost £27bn more on priority areas per year by 2029.

    They say these will be affordable via increasing levies on banks which would net an extra £4bn, raising more than £5bn by reforming capital gains tax and imposing a new tax on frequent fliers.

    Liberal Democrats leader Sir Ed Davey attends the UK's national commemorative event for the 80th anniversary of D-Day, hosted by the Ministry of Defence on Southsea Common in Portsmouth, Hampshire, Britain June 5, 2024. Andrew Matthews/Pool via REUTERS
    Liberal Democrats leader Sir Ed Davey attends the UK's national commemorative event for the 80th anniversary of D-Day, hosted by the Ministry of Defence on Southsea Common in Portsmouth, Hampshire, Britain June 5, 2024. Andrew Matthews/Pool via REUTERS (via REUTERS / Reuters)
  • More moves from London? Ashtead explores Wall Street: Report

    Yahoo Finance UK reporter Pedro Goncalves writes: The FTSE 100 equipment hire giant in the early stages of exploring a switch of its listing from London to Wall Street, according to The Sunday Telegraph.

    The company has reportedly asked City advisers to review the potential merits of the move.

    Board members at the FTSE 100 group are concerned that the company, which operates largely in the United States, is trading a "significant" valuation gap to that of its US rivals.

    "Ashtead is essentially a US business operationally, with over 90% of its revenue and over 95% of its operating profits being generated in North America," Lucinda Riches, a non-executive director at Ashtead said.

    Ashtead's departure would come as another blow for London after the loss of the likes of Cambridge-based chip firm Arm Holdings to the US.

  • Is a potential Labour government helping the pound

    Matthew Ryan, head of market strategy at Ebury, thinks it is.

    “The prospect for an overwhelming Labour victory at the General Election next month is actually buoying Sterling, which has broken out of its year long range against the euro.

    “Markets view a Labour majority as perhaps the most market-friendly outcome of the elections – a reflection of both the lingering damage done by Liz Truss’s ill-fated budget, a shift towards the political centre under Keir Starmer and the likelihood of a less contentious relationship with the European Union.

    “The next few days will see a handful of important macroeconomic data releases out of the UK.

    “The key employment and wages report for May will be released on Tuesday. With services inflation running considerably hotter than expected, we would expect a significant market reaction to any upside surprise in wage growth, which continues to run at around 6% on an annual basis.

    “Sterling bears, meanwhile, will be looking for signs of a growth slowdown in Wednesday’s GDP report for April - economists are currently pencilling in no growth at all.”

  • What to expect from Apple’s AI unveiling

    Apple’s (AAPL) Worldwide Developers Conference event kicks off on Monday from the company’s headquarters in Cupertino, California, with a keynote by CEO Tim Cook. One of the most anticipated Apple events in years, WWDC 2024 is expected to serve as the launch point for the company’s big push into generative AI.

    From our US team, a take on the Apple WWDC 2024

  • How US markets are faring at the opening bell

  • UK wage growth set to jump

    Economists polled by Bloomberg age growth in the UK expect new wage data to show regular pay increases accelerating to 6.1% in the three months to April.

    The surge will partly be down to minimum wage jumping by almost 10% in April.

    Pay inflation puts the Bank of England in a tricky situation as it positions for rate cuts — which have been ruled out already for June. A tight labour market could fuel inflation.

  • Stocks to watch at the open later on: Apple

    Apple shares were flat in pre-market trading, with the iPhone maker failing to spark interest from investors following reports that it is expected to enter artificial intelligence race with ambitions to overtake the early leaders.

    However, the stock price might surge later as Apple's annual World Wide Developers Conference kicks off on Monday night.

    Apple is expected to unveil a wide range of new generative artificial intelligence tools as it looks to rival Google (GOOG) and Microsoft (MSFT) in embracing the emerging technology.

    Experts are predicting Apple’s AI plans to come in several layers. Firstly, that broad AI-powered updates will be made across core apps to help with basic, everyday tasks, for example new AI editing tools to help with photos and videos, better predictive text for messages and emails or quick, AI-generated summaries of webpages or longer emails.

    In addition to this, there are reports that Apple will use the event to announce a deal with ChatGPT maker OpenAI, which will see the chatbot and virtual assistant integrated directly into Apple’s software across iPhone, iPad and Mac, to help with more detailed, complex tasks.

    READ MORE: Trending tickers

  • The FTSE and European stocks have opened lower

  • Overnight in Asia

    Asian stocks led indexes to a mixed day of trade on Monday, as the Nikkei (^N225) in Japan rose 0.9% and the Hang Seng in Hong Kong (^HSI) fell 0.6% in the session.

    The moves came at a time of macroeconomic change, with French president Emmanuel Macron calling voters to the polls and EU election results coming in.

    Traders are also cautious as market watchers taper their expectations of a rate cut in the US before the summer is out. This week's data should provide more clarity on the rate path.

  • Last week in the US

    Stocks closed last week near record highs as the latest jobs report showed a US labour market that's cooling, but not at a pace that economists find concerning.

    The Nasdaq Composite (^IXIC) was up about 2.3%, and the S&P 500 (^GSPC) rose roughly 1.3%. The Dow Jones Industrial Average (^DJI) was up about 0.3%.

    The week's highlights included the June Federal Reserve meeting and a key inflation reading on Wednesday. The first reading of consumer sentiment for June is also expected on Friday.

    In corporate news, Big Tech ekicks off the week with Nvidia's (NVDA) 10-for-1 stock split and Apple's (AAPL) Worldwide Developer's Conference both set for Monday. A vote on Tesla (TSLA) CEO Elon Musk's $56 billion pay package is expected on Thursday.

  • Good morning!

    Hello from London. Overnight we've had more election news from Europe, as campaigns roll on in the UK.

    We'll be looking ahead to UK wage data on Tuesday and the Federal Reserve's interest rate decision on Wednesday.

    Let's get to it.

Watch: France's Macron Calls Snap Election