European shares drifted lower Monday as investors paused for breath following a sizeable rally last week. Despite the move lower, there are few signs of the turmoil that gripped stock markets earlier this month.
In Europe, Germany’s DAX was down 0.3 per cent at 12,412 while the FTSE 100 index of leading British shares fell 0.3 per cent to 7,276. The CAC 40 in France was 0.2 per cent lower at 5.269.
North American major markets were closed Monday for holidays.
Earlier this month there were real concerns that global stock markets were poised for a sustained period of weakness. However, sentiment has recovered over the past week or so, with many traders adjusting to the altered economic environment.
“So far, global equity markets seem to be adjusting to the prospect of higher inflation, presumably on the basis that increases in corporate pricing power will be positive for earnings rather than of the cost-push kind that dents profit margins and result in a stagflationary economy,” said Neil MacKinnon, global macro strategist at VTB Capital.
Earlier, Asian stocks performed strongly as they caught up with Friday’s further advance, particularly on Wall Street. Japan’s Nikkei 225 jumped 2 per cent to 22,149.21. The Tokyo benchmark ended the day just 2.7 per cent below where it started 2018, having recouped most of its losses during the recent global rout. South Korea’s Kospi advanced 0.9 per cent to 2,442.82. Australia’s S&P/ASX 200 rose 0.6 per cent to 5,941.60. Chinese markets were closed for Lunar New Year.
Benchmark U.S. crude rose 57 cents to $62.25 US per barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, was up 49 cents at $65.33 US a barrel in London.