Today’s markets: Europe rallies despite political woes

The tech rally that started overight in the US is pushing up European stock markets this morning, with the FTSE 100 rising 0.7 per cent. In Frankfurt, shares are up 0.3 per cent as the Dax hit a record high, despite the weak economic outlook for Germany and political troubles brewing. Speaking on which, shares in Paris also managed to go higher, rising 0.6 per cent. The stock market is not the economy – mid-caps are down 3 per cent for the year in Germany.

Wall Street was mixed as the S&P 500 ground higher by a 0.25 per cent but the tech-heavy Nasdaq rose 1 per cent and industrial Dow Jones fell a touch. Both the S&P 500 and Nasdaq hit record highs as bulls continue to grind the market upwards. The dollar trades a little lighter today allowing GBP and EUR to push up a bit. Crude oil may have found a bottom and bulls look to break $69 (WTI spot) to reverse the trend.

A Delaware judge has blocked Tesla’s second attempt to push through a mammoth pay award to CEO Elon Musk. The deal was worth $56bn in January, when it was voided, but would have been worth more than $100bn today after stock’s rally this year. Let’s see how much influence Musk has. Shares rose about 3.5 per cent after Roth MKM upgraded the stock to buy from neutral, citing his relationship with incoming president Donald Trump. 

Marine Le Pen said her Rassemblement National party would topple France’s minority government after he attempted to push through unpopular budget measures. Fresh parliamentary elections cannot be held until July; Macron has until 2027. The chaos will continue as France remains in a state of ‘ungovernance’. French debt has been affected, with the spread between the German bund widening. French stocks were trading at the lowest in some months but have rebounded a touch in the last couple of sessions. And the rest of the Eurozone does not seem to be suffering any contagion from France for the time being. 

Meanwhile the focus this month is also on some big central bank decisions, starting with the European Central Bank on 12 Decmeber, then the Federal Reserve on 18 December. The Bank of England and Bank of Japan follow on the next day.

Fed governor Christopher Waller said he is inclined “at present” to support an interest rate cut this month. NY Fed president John Williams said “monetary policy remains in restrictive territory…I expect it will be appropriate to continue to move to a more neutral policy setting over time…the path for policy will depend on the data”.

By Neil Wilson, chief market analyst at Finalto