European stock markets retreated yesterday following a largely downbeat performance by Asia, as Wall Street trod water.
“It was a directionless start to the new week for European markets as investors digested more hawkish Fed speak, a drop in the price of oil, improved French and German economic data and another mega-merger facing regulatory headwinds,” said Jasper Lawler at CMC Markets UK.
European stocks have pitched back and forth over the past week as investors have begun to take more seriously the probability the US Federal Reserve could raise interest rates in June.
Yoav Nizard at FXCM currency brokerage said the “market is indecisive, torn between a possible increase in rates by the Federal Reserve and expectations of new supportive measures from the ECB following increased deflationary risks in the eurozone”.
Moreover, “the drop in oil prices puts under pressure European stock exchanges which do not gain from a weak euro,” he added.
Yesterday’s big corporate news came from German drugs and chemicals giant Bayer, which said it had offered $62bn (€55bn) for US agriculture group Monsanto as it seeks to create the world’s biggest supplier of seeds, pesticides and genetically-modified crops.
Bayer shares fell 5.7 % to €84.42 on Frankfurt’s DAX 30 index, which closed down 0.7 %.
Monsanto shares climbed 4.9 % to $106.52 in trading on Wall Street.
London’s benchmark FTSE 100 index eased 0.1 % after the government warned yesterday in a report that Britain could be plunged into a year-long recession and lose hundreds of thousands of jobs if it voted to leave the EU next month.
Meanwhile the Paris CAC 40 shed 0.7 %, with AXA also dropping 0.7 % after it became the first global insurer to cut ties with the tobacco industry, saying it would sell about €1.8bn worth of investments in the sector
In the foreign exchange, the euro fell against the dollar, which in turn was down versus the yen.