Market Musings 300825: Commodity-related stocks to the fore
French financial markets took a tumble this week off the back of renewed political uncertainty, with the current administration led by Francois Bayrou subject to a parliamentary vote of confidence on 8 September, which they are likely to lose. The likely result will be that French President Emmanuel Macron will need to appoint yet another new Prime Minister in order to form a new administration, who will be unable to get a cost-cutting budget passed by the French parliament. This has hit both French stocks in the form of the CAC-40 index and also Eurozone banks, with French banks falling due to this uncertainty.
French stocks, Euro banks hurt by French political uncertainty
Interestingly, there has been little wider contagion from this French domestic budget stress to the wider Eurozone, with the euro holding close to $1.17 and 86p and retaining the bulk of its gains since the start of this year against these two currencies.
Euro little affected by French concerns, so far
UK banks also took a tumble this week off the back of rumours that the Labour government will unveil a new bank levy in the upcoming UK Budget. This has been levied before on banks, with the Chancellor of the Exchequer Rachel Reeves looking to raise further tax revenues. Hopefully this will not become a reality, and then these banks can recover on the subsequent relief.
Good recent run for UK domestic banks comes to an abrupt halt
In the US, the long-awaited Nvidia quarterly results outlined strong growth, but perhaps guidance for the rest of the year that was not as outlandishly strong as some bullish investors had hoped for. The Magnificent 7 group of mega-cap tech stocks have pulled back a little in the past few days after a 50% advance from the April lows, threatening the solid 4-month uptrend.
Magnificent 7 cool post Nvidia results
Recall however, that for pound- or euro-based investors, US large-cap stocks have delivered weak returns in spite of the huge rebound since April…
