Global equities and bonds remain under pressure, giving back much of the early gains triggered by French far-right leader Marine le Pen's promise to respect political institutions if she wins the upcoming general election. We see Wall Street slightly down (S&P 500 – 0.1% pre-market) and stocks in Europe also gave back their early gains.
On a rather quiet day, cautious sentiment remains as stocks struggle to recover from last week's sell-off triggered by French President Emmanuel Macron's call for early elections, which could bring gains to right-wing groups such as Le Pen's National Rally. Markets remain nervous about the heightened political risk posed by the situation in France. There are many indications that instability in France will increase after the elections, which also pose a risk to Macron's important but widely unpopular economic reforms.
While markets in Europe appear to be oversold in the short term, it will be very difficult to mount a significant recovery before the first round of voting on June 30. The ongoing political uncertainty makes equities in Europe, and in France in particular, unattractive for the time being. Analysts, such as those from Citigroup today, have also warned that a possible far-right majority or another coalition with left-wing parties in France remains a major risk.
Meanwhile, investors are also listening to further statements from Fed representatives. The president of the Minneapolis Federal Reserve, Neel Kashkari, said on Sunday that it was a “reasonable prediction” that the Fed would cut interest rates once this year and wait until December to do so.
Monetary policy fears are also weighing on market sentiment ahead of interest rate decisions from a number of central banks this week, including the Bank of England (Thursday) and the Australian and Norwegian central banks. The rather hawkish comments from these central banks and the fact that they are in no hurry to cut rates could further weigh on market sentiment, especially as Wall Street is still near its all-time highs.
Higher yields, continued demand for the USD and cautious sentiment are weighing on commodity prices, including gold. Oil prices continue to be supported by expectations of rising demand for oil and a slight supply deficit at present.
👁 ROB'S MARKET OVERVIEW:
June 17, 2024
🌐/🇺🇸 Global Markets ➡️/↘️
Cyclical / Luxury Stocks ➡️/↘️
Tech/Growth Stocks ↕️
Financial Stocks ➡️
Defensive Stocks ➡️
Energy Stocks ➡️
Materials Stocks ↘️
💱 Forex
EUR ↗️/↕️ (benefiting from oversold conditions after last week's heavy slide; remains pressured)
USD ➡️/↗️ (benefiting from safe haven demand; slight headwinds from still very loose BoJ policy)
CAD ➡️
GBP, CHF ↘️/➡️
AUD ↘️ (headwinds from increased safe haven demand, uncertainty in Europe)
JPY ↘️ (headwinds from Bank of Japan remaining accommodative / expectations of slower rate cuts in US / Europe)
⚒ Commodity Markets ↕️/↘️
Oil prices ↕️ (upside seems limited with rising concerns about rates remining high for longer)
Natural Gas prices ↘️
Metal prices ↘️
Gold ↘️/➡️ (bearish momentum with gold unable to push away from $2,300)
⚡️Cryptos ↕️ (concerns about rates remaining high for longer weighs on cryptos; Bitcoin with support at $65K)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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