Economic Indicators & Central Banks:
- Asian stocks mostly fell today, along with European and especially French bond markets which sold off modestly, with the Euro dropping on the shock French election outcome.
- Europe: The French leftist alliance is the surprise victor, winning the most seats. This outcome potentially limits the influence of the left-wing New Popular Front coalition and Marine Le Pen’s National Rally, both of which support increased public spending.
- Losses in the Euro and European bonds were tempered by the uncertainty still surrounding the structure of the next French government. The key questions for the markets include who the prime minister will be, how effectively they can collaborate with the far left to pass legislation, and crucially, what this will mean for France’s fiscal discipline.
- US: The US Jobs report revealed modest downside payroll surprises via revision and weak civilian jobs data that raised the jobless rate and exacerbated the big household-establishment divergence since late-2023.
- China: The PBOC aimed to gain more control over market interest rates by announcing additional open market operations and tightening the band for short-term rate fluctuations.
- Key events: Fed Chair Powell testimony and US inflation data are key events. Earnings reports from major US banks, including JPMorgan Chase & Co., are anticipated, along with rate decisions in New Zealand and South Korea.
Asian & European Open:
- A drop in Chinese equities today pushed China’s CSI 300 negative for the first time in five months ahead of a key Chinese Communist meeting.
- French government bond futures lagged behind their German counterparts, although the spread between them started to narrow, indicating waning market jitters.
- Wall Street climbed amid a variety of rationale including Fed hopes, the decline in yields, and a still decent, albeit more moderate employment report.
- The NASDAQ and S&P500 hit more fresh all-time highs, the 24th and 34th, respectively, of 2024. The NASDAQ surged 0.90% to 18,352 and the S&P500 was up 0.54% to 5567. The Dow managed a 0.17% gain to 39,375.
- The MSCI Asia Pacific Index of stocks rose by as much as 0.4%, with TSMC reaching a record high after Morgan Stanley raised its price target for the company.
- Boeing Co. agreed to plead guilty to criminal conspiracy to defraud the US, following a Justice Department conclusion that the company failed to comply with a previous settlement related to two 737 Max jetliner crashes.
Financial Markets Performance:
- The USDIndex holds below 105, while EURUSD returned some losses and turned back to 1.0835 area. The USDJPY recovered to 160.80.
- Bitcoin fell by 5.2% to $55,290 some $19,000 below March’s record high. This is due to concerns over potential sales by creditors of the failed Mt. Gox exchange which has begun returning a roughly $8 billion hoard of the largest digital asset.
- Gold and Oil prices steadied. Oil traders monitored twin threats to production from a storm in the US and wildfires in Canada.
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Andria Pichidi
Market Analyst
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