European Stocks Dip on Last Day of Quarter, S&P500 Logs a New High

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Principal Points

• European stocks end Wednesday lower but post solid gains in the first half of 2021
• Wall Street equities turn mostly higher to finish the quarter, S&P500 ekes out another record

The European markets dropped on the last trading day of the second quarter, but still performed remarkably well throughout the first half of 2021. Despite the solid climb over the first six months of the year, the last few days were rather weak for European equities as the old continent struggles to contain the persistent Delta strain, which threatens to undermine recovery.

The pan-European Stoxx Europe 600 slid on Wednesday, losing 0.77%, or 3.53 points, to end the quarter at 452.84. Shares in the auto industry led the losses as the sector sank 1.9%. The region-wide index still managed to push 13% higher in the first half of the year. The European benchmark average notched its fifth straight month of gains as investors piled into stocks from every sector anticipating a swift economic recovery.

The German stock market declined on Wednesday as the DAX dropped 1.02%, followed by France’s CAC40 which closed 0.91% lower. The UK’s FTSE100 slid 0.71%. Despite losses on the last day of the first half, European indexes cruised to records for most of the second quarter.

Wednesday was also significant for European markets due to the slew of economic data released. Eurozone inflation dropped in June to 1.9% from 2.0% In May, in line with comments by European Central Bank officials that inflation would be transitory. Still, the ECB’s latest projections point to inflation at 2.5% towards the end of the year.

A Strong Monthly End for the S&P500

On the other end of the Atlantic, Wall Street stocks kept pushing higher on Wednesday with the S&P500 notching another record high to finish the quarter. US stocks traded in a fairly narrow range yesterday as investors took time to reassess the market after a wild first half of dozens of record highs, chaotic trading in meme stocks, abundant fiscal and monetary support, and high inflation pressures.

The broad-market S&P500 index continued its June rally and ended Wednesday trading higher by 5.7 points, or 0.13%, to 4,297.50. The new top was the 34th record closing for the index, beating the previous year’s number of 33 new highs. The index ended the first six months of 2021 up 14.4%, the biggest first-half gain since 2019.

The Dow Jones Industrial Average climbed higher by 210.22 points, or 0.61%, to finish the day at 34,502.51. The blue-chip stock average now hovers less than 1% away from its record closing in May. The Nasdaq Composite declined as the tech rally cooled. The technology-driven index retreated from its Tuesday record and ended Wednesday lower by 24.38 points, or 0.17%, to 14,503.95.

Meanwhile, the dollar strengthened and the euro declined ahead of Friday’s US jobs report that will show if hiring has picked up in June. The greenback has been the preferred major currency for global investors despite higher inflation in the US in recent months. The US dollar index, indicating the performance of the dollar against a basket of currencies, ticked higher on Wednesday and reached a monthly gain of nearly 3%.

On the cryptocurrency front, Bitcoin remained subdued below the $35,000 mark as crypto enthusiasts were unable to lock in gains for June. The largest digital currency dropped almost 6% in June, posting its third straight month of decline. Ether, the crypto token powering the Ethereum network, tumbled 14% over the last month, and Dogecoin, the cryptocurrency favored by Elon Musk, tumbled 24% in June.