Economic Indicators & Central Banks:
- The Euro dropped sharply due to political uncertainty after French President Emmanuel Macron called a snap election, influenced by far-right gains in the European Union vote.
- Eurosceptic nationalists made the biggest gains in European Parliament elections on Sunday, an aggregated exit poll showed, although centre, liberal and socialist parties were set to retain a majority.
- German Chancellor Olaf Scholz’s Social Democrats suffered a record rout as well!
- Markets in China, Hong Kong, Taiwan, and Australia were closed for holidays.
- Japan: GDP shrank at an annual rate of 1.8% in Q1, slightly better than the initial estimate of a 2.0% contraction.
- Automaker Scandal: Several major automakers, including Toyota Motor Corp., are involved in a scandal over improper vehicle model tests. Government officials raided Honda Motor Co.’s Tokyo headquarters and Suzuki Motor Corp. Raids are expected soon on Mazda Motor Corp.
- US: Market expectations for Fed rate cuts this year decreased to 36 basis points from nearly 50 basis points. The likelihood of a rate cut in September dropped to around 50% from 70%.
- US inflation data is due on Wednesday, which will influence market direction.
Asian & European Open:
- Asian stock markets declined overnight, as markets reacted to US jobs data, which dented hopes for Fed cuts this year.
- The MSCI index for the Asia-Pacific region outside Japan declined -0.3%.
- The CAC 40 future is down -1.4% and has led to a wider correction in European and US futures. The DAX lifted to 105.254.
Financial Markets Performance:
- The USDIndex remained firm ahead of the Fed’s upcoming meeting. The USD’s strength was bolstered by a stronger-than-expected jobs report (272K), reducing the likelihood of imminent rate cuts by the Fed.
- The EURUSD declined by 0.44% to $1.0740, falling over 2.5% against the USD this year, and reached its lowest since August 2022 against the GBP.
- The USDJPY advanced to 157.17 – GDP contracted, wage growth has been slow, Import prices have risen due to a weaker yen, sluggish consumer spending has negatively affected the economy, private consumption makes up half of Japan’s economic activity.
- USOIL sustained gains above to $75, supported by hopes of increasing fuel demand this summer.
- Gold dipped to $2,292.70, with key 2-month support at $2,275.
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Andria Pichidi
Market Analyst
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