US Stocks Mixed as Euro Slides on France Concerns and Brazil Surges
US stocks opened mixed on Monday as easing expectations of a Federal Reserve rate hike provided some relief. The Dow Jones Industrial Average (.DJI) dropped 0.57%, while the S&P 500 (.SPX) gained 0.14% and the Nasdaq Composite (.IXIC) added about 0.5%. Treasury yields and oil prices remained high, reflecting persistent market uncertainty.
Concerns over France's fiscal health pushed the euro to a 17-month low, weighing on French assets. The STOXX 600 (.STOXX) index rose 0.15%, but Paris shares (.FCHI) fell about 1.1% to six-month lows. The euro briefly dipped to $1.1160 before recovering slightly to $1.119, down about 2.5% last month. Investors are worried about France's rising debt and political gridlock ahead of next year's presidential election.
In contrast, Brazilian stocks surged after right-wing Senator Flavio Bolsonaro advanced to a runoff against leftist incumbent Luiz Inacio Lula da Silva. The iShares MSCI Brazil ETF jumped about 14%, and the Brazilian real strengthened against the dollar as investors hoped for more business-friendly policies. MSCI's global stock gauge (.MIWD00000PUS) rose 0.26%, reflecting cautious optimism.
Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, noted the relative calm in equity markets amid a 'perfect storm' in the bond market. She highlighted three areas for stress signs: equity market and earnings revisions breadth, high-yield bond spreads, and US dollar strength.