European markets launched a week without a clean ceiling, wedged between two main uncertainties: the immediate decision of central banks and the fear of global commercial hardening. On Monday, May 5, the main financial centers show obvious caution, illustrated slightly withdrawal indexes and low exchange volumes. Investors are frantically waiting for further announcements of the Fed and Bank of England, in a climate where every money or diplomatic signal can tilt this trend.
In short
- European markets develop in the scattered order of the waiting decision of the main central banks this week.
- The Fed should maintain its rates while on the Bank of England side is expected to decline.
- The absence of the main macroeconomic data strengthens the waiting -a -see investors’ attitude.
- The return of aggressive commercial rhetoric between Washington and Beijing stimulated concerns about the trade war.
Money Waiting -a -viz: Europe suspended to Fed and Boe decision
On Monday, European stock markets ended with a scattered order in the climate of expectations. In Paris CAC 40, it fell by 0.55 %to establish itself to 7,727.93 points, while Frankfurt distinguishes between DAX by 1.08 %.
This meeting without a clear direction reflects tense market expectations towards the next meeting of monetary policy, in particular negotiations on the American Federal Reserve (Wednesday) and the Bank of England (Thursday).
Investors are waiting mainly for monetary policy comments from Fed and Boe. In fact, the consensus occurs around the maintenance of the Fed rates, with a possible decline deferred until July and a probable decline of 0.25 points on the British side.
Markets react little, due to lack of macroeconomic data capable of forcing a hand to central banks. In this context, the session meant the following elements:
- CAC 40: -0.55 %, affected by a lack of volume due to London closure;
- DAX (Germany): +1.08 %, helped revive political optimism after the arrival of Friedrich Merz into the Chancellor;
- Eurostoxx 50: -0.03 %, which illustrates the general indecision in the euro area;
- German rates: 10 -year -old -bund remained stable to 2.5190 %and increased slightly for two years (+0.5 pb to 1.7730 %);
- Low volumes: The closure of the London holiday market reduced liquidity and emphasized investors’ hesitation.
In the absence of an immediate economic catalyst, the appearance is now turned to talk about central banks. Depending on their tone, it could revive volatility on traditional and crypto markets or, on the contrary, extend this stage of waiting and see.
American protectionism: towards the new front of a trade war?
While markets spend monetary uncertainty, another threat gains intensity: the intensity of the offensive return of American protectionism. This weekend President Donald Trump announced a new 100 % surcharge for films produced by the US.
“American officials have spoken to many countries, including China”He said on Sunday. He rejects any immediate meeting with President Xi Jinping.
This recovery of the voltage store occurs in the context of the persistent appendix between Washington and Beijing, without any noticeable procedure in recent weeks. The warning remains in order, especially because these notifications interfere with a particularly sensitive timing for world markets.
Thus, the ghost of generalized tariff climbing strongly weighs global economic expectations. The latest data in the euro area zone suggest a slight reflection in the morale of investors in May, but always at a low level, weighted with a recent surcharge, Washington decided.
In the United States, activity in the service sector increased unexpectedly in April, but the prices paid by society have reached two years of unprecedented summit, which caused concerns about inflation recovery.
At the same time, oil prices fell, Brent loses $ 2.38 % to $ 59.83, while WTI dropped by 2.66 % to $ 56.74. OPEC+ has actually decided to continue to increase its production, but it is a prospect of reducing the demand associated with a trade war that seems to be the dominant of traders’ analysis.
This climate of tension could have more consequences in the short and medium term. On the one hand, it feeds a new wave of cautiousness in the emerging markets and Asian currencies, starting with the Taiwanese dollar, which gained land on Monday. On the other hand, it complicates the task of central banks: any decline in rates aimed at promoting activities could happen against imported inflation. Finally, at the geopolitical level, the lack of structured dialogue between Washington and Beijing is afraid to return to a reprisal cycle that has not yet brought all its side effects. If the markets hold their breath while waiting for the announcement of central banks, it is also because they are afraid that another spark comes from a completely different field: the tension of international trade.
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A graduate of the Toulouse and the Blockchain Consultant Certification certification holder and I joined the adventure of Cointribuna in 2019. I convinced of the potential of blockchain to transform many economy sectors, committing to raising awareness and informing the general public about how the ecosysty developed. My goal is to allow everyone to better understand blockchain and take the opportunity they offer. I try to provide an objective analysis of messages every day, decrypt trends on the market, hand over the latest technological innovations and introduce the economic and social issues of this revolution.
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The words and opinions expressed in this article are involved only by their author and should not be considered investment counseling. Do your own research before any investment decision.
