Market Turbulence: Global Stocks React to French Political Instability

Markets experienced volatility as French political instability led to a no-confidence motion against Prime Minister Michel Barnier. U.S. manufacturing showed signs of improvement, while the dollar strengthened significantly, driven by economic developments and potential future Federal Reserve rate cuts. Global stocks and various financial indices responded to these events.

The markets were highly volatile on Monday following news of a potential no-confidence vote against French Prime Minister Michel Barnier, raising concerns about a governmental collapse. French stocks fell by 0.6%, while broader European shares saw minor gains at 0.3%, reflecting investor apprehension.

U.S. manufacturing data revealed a mixed outlook with some positive developments, such as a rise in orders after months of decline, despite overall contraction. The U.S. stock market mirrored this sentiment; tech stocks surged, but the Dow Jones Industrial Average decreased by 0.33%, while the S&P 500 and Nasdaq Composite showed gains.

The dollar gained strength against the euro, which dipped nearly 1% following remarks from U.S. President-elect Donald Trump urging BRICS nations not to replace the dollar. This currency fluctuation is part of a broader trend influenced by speculation over potential ECB rate cuts. Investors are closely watching the Federal Reserve and upcoming payroll reports, which may affect future rate decisions.

(With inputs from agencies.)