US Stocks Waver, European Markets Hit Records to Start the Month

02 Jun 2021 · 3rd Party Analysis

US Stocks Waver, European Markets Hit Records to Start the Month

WRITTEN BY ThorFX

In Summary

  • US stocks were unable to sustain an upside wave and pulled back to finish relatively flat
  • European indexes continue to march higher amid reopening economies in the euro area

Wall Street stocks kicked off June with a quiet and subdued trading session after a three-day break. Major US indexes finished Tuesday’s session roughly flat as investors could not sustain an intraday effort to keep all three benchmarks in the green. By contrast, European bourses pushed to new records on Tuesday, as German and UK’s mid-cap shares set all-time highs.

US equities climbed after the opening bell to kick off the month on a high note. The Dow Jones Industrial Average spiked over 300 points in the early hours but later pulled back and erased most of the gains. The 30-stock index ended the session up 0.13%, or 45.86 points, at 34,575.31. Still, the blue-chip index had its third-highest close in history. The S&P500 turned negative in the final few hours and finished down 0.05%, or 2.07 points, at 4,202.04. The Nasdaq Composite fell 0.09%, or 12.26 points, to 13,736.48.

In individual stocks, shares of companies positioned to benefit from the reopening gained the most. The energy and materials sectors in the S&P were among the best performers. Marathon Oil rallied nearly 14% to $13,76, while Boeing jumped 3.12% to $254.73. Big-name technology stocks retreated and ended the session with mild losses. AMC Entertainment, the popular stock among the retail trading community, spiked 23% on the news that the company had sold shares worth $230.5mn to Mudrick Capital Management.

Confidence Boost Encourages Investors

Traders and investors have largely been feeling more confident to bet on risk assets despite rising inflation pressures. The notion that the Federal Reserve has the necessary tools to tackle the negative impact of higher prices on the economy had pushed major indexes back toward their record-high levels. Policymakers at the US central bank will hold a meeting in mid-June where they will discuss if the recent price pressures are only transitory or a durable trend that has the potential to derail the economic recovery.

In overseas markets, the region-wide Stoxx Europe 600 notched another record high on Tuesday, rising 0.75%, or 3.34 points, to 450.10. Germany’s DAX and UK’s mid-cap FTSE 250 also sealed new all-time highs yesterday, driven mainly by expectations that the economic reopening and the accelerating vaccine rollouts will lead to renewed business and social activities.

All major European markets on Tuesday ended trading in positive territory. The German DAX was the biggest winner, up 0.95%, or 146.23 points, ending at 15,567.36. UK’s FTSE 100 added 0.82%, or 57.85 points, to 7,080.46. The French CAC40 advanced 0.66%, or 42.23 points, to 6,489.40.

Amid positive signs that the global economic recovery was gaining speed, consumer prices in the eurozone rose 2% in May, surpassing the ECB’s target. The European Central Bank has its inflation target set just below 2%. ECB President Christine Lagarde, however, earlier in the month said if there were any inflation pressures in the months to come, they would most likely be temporary. The surge in May was rather unexpected by the ECB as the central bank had anticipated 2% inflation only in the last quarter of this year.

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