European equities end their four-day slide after investors interpreted the first round of parliamentary elections in France as an indication that Marine Le Pen's party faces a more difficult path to overall victory than expected. The spread between 10-year Franco-German bonds fell to a two-week low, suggesting that investors are reducing the likelihood of a possible worst-case scenario. The second round of elections in France will take place on July 7
Outside of Europe, US stock futures rose by around 0.3% in pre-market trading and equities in Asia and emerging markets are also showing signs of a positive start to the second half of the year. Yields on US Treasuries continue to rise, partly because demand for safe havens (or bonds) is falling slightly.
US equities are benefiting from hopes of another strong earnings season. Goldman Sachs analysts expect S&P 500 companies' earnings to have risen by an average of 9% from April to June – the largest y-o-y increase since the fourth quarter of 2021.
We also see sustained demand for oil continuing to rise, benefiting from signs of an improving economic outlook, with even data from China pointing to an improvement in production. Eurozone manufacturing PMI data showed signs of improvement. Manufacturing data in the US later today will shed light on whether the US economy is showing signs of resilience as inflation gradually cools. The gold price rose back above $2,335 but faces fundamental headwinds from higher US yields.
In a holiday-shortened week, we do not expect any major moves but see profit-taking at the end of the previous quarter showing signs of reversal and risks in France/Europe are also still heavily priced in – providing room for a rebound.
👁 ROB'S MARKET OVERVIEW:
July 1, 2024
🌐/🇺🇸 Global Markets ➡️/↗️
Cyclical / Luxury Stocks ➡️/↗️
Tech/Growth Stocks ↕️/↗️
Financial Stocks ➡️/↗️
Defensive Stocks ➡️
Energy Stocks ➡️/↗️
Materials Stocks ↗️
💱 Forex
EUR ↗️/➡️/↘️ (benefiting from oversold conditions but with little additional short-term upside)
GBP ➡️
USD, CAD ↘️/➡️/↗️
JPY, CHF, AUD ↘️/➡️
⚒ Commodity Markets ↕️
Oil prices ➡️/↗️
Natural Gas prices ↘️/↕️
Metal prices ↗️/➡️
Gold ↗️/↕️ (recovering from being technically oversold; higher yields limit gold's short-term upside)
⚡️Cryptos ↕️/↗️ (dip buying remains more dominant for now but overall headwinds remains; short-term potentially more downside with Mt. Gox distributing bitcoin)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
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