European markets look for a slightly lower start as the UK and US come back online on Tuesday after an uneventful Asian session where China is still on holiday.
Talk that Italy will spice up Europe’s political landscape again with its own snap election is unsettling the idea that Europe is now free of populist risk in 2017. Former Italian Prime Minister Renzi has suggested Italy could hold simultaneous elections with Germany in September. Not to be left out, Greece may opt out of its next bailout if debt relief deal isn’t struck, adding to the potential for market disruption.
European assets need the three pillars of stronger economic data, higher political risk in the US and reduced political risk in Europe to outperform. Italy and Greece could are holding the sledgehammer that could knock down one of those three pillars. The confluence of risk associated with Italian elections, the Greek bailout and ECB President emphasising global risks are sending the euro lower on Tuesday.
The Jeremy Paxman interviews with PM Theresa May and opposition leader Jeremy Corbyn offered no standout moments to roil markets (or entertain viewers). If anything, the sense that the Conservatives have jeopardised their popularity by resting on their laurels continues to pressure the pound and aid the FTSE.
Fed member Bullard poured cold water over the idea of a ramp up in US growth and inflation this year in an interview with Bloomberg TV. The dollar’s strength on Tuesday appears to be more a reflection of short-covering amid euro-weakness than outright bullishness towards the US. The dollar fell against the yen and gold was higher as investors kept an interest in havens.
FTSE: to open lower by 20 points at 7,527
DAX: to open lower by 20 points at 12,608
CAC: to open lower by 33 points at 5299
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