Europe
European equities are buoyed by the political success of Emmanuel Macron. The news that Mr Macron’s party took the majority of the seats in the French assembly was welcomed by traders, as it represents political stability in one of the biggest counties of the EU. France’s economy didn’t fair too well under Francois Hollande, and investors are optimistic about the new French leader. The UK’s Brexit Secretary, David Davis, was hopeful going into the Brexit talks today, and seeing as himself and Michel Barnier exchanged gifts at their meeting, it would appear that the talks started off on the right foot. The process of extracting the UK from the EU, will certainly be time consuming, so investors aren’t waiting for some fast agreement, but as the process is staggered, they will be paying close attention at every turn.
The rally in copper today has helped, Glencore (LON:GLEN), Anglo American (LON:AAL), Rio Tinto (LON:RIO) and BHP Billiton (LON:BLT). The miners underwent a huge rally between early 2016 and early 2107, and they have been broadly trading lower since February. Dealers are now buying back in seeing as they are relatively cheap again.
US
The Dow Jones and the S&P 500 have it fresh record highs, while the NASDAQ 100 is higher, it is still well off the record high. It was over one week ago that Goldman Sachs (NYSE:GS) wrote that much-talked about research note, that some of the major technology stocks are overvalued, but Apple (NASDAQ:AAPL) is the biggest gainer on the Dow Jones.
Amazon (NASDAQ:AMZN) opened at a record high, as the stock is still in demand after Friday’s news that it is to acquire Whole Foods.
Netflix (NASDAQ:NFLX), Alphabet (NASDAQ:GOOGL), and Facebook (NASDAQ:FB) are higher on the day as dealers are using their sell-off on the back of the Goldman’s note as an opportunity to bargain hunt.
Oil titans, Chevron (NYSE:CVX) and Exxon (NYSE:XOM) are in the red as the underlying oil market is weak, and it was been in decline for over three weeks.
FX
The GBP/USD got off to a solid start today but the positive run was short lived. The US dollar broadly moved higher after New York Fed President William Dudley is happy with the state of the US economy, and he isn’t paying too much attention to what the US government bond yields are showing. As if the pound didn’t already have enough to contend with since with the uncertainty hanging over Downing Street, today is the first day of Brexit talks. We are nearly one year on since the UK voted to leave the EU and Brexit Secretary, David Davis is in Brussels today kicking off the talks.
The EUR/USD welcomed the news that Emmanuel Macron’s party, La Republique En Marche, obtained a majority in the national assembly. The party was poised to do well in the election, and now that they have secured their majority it will bring confidence to France and the eurozone. The single currency was also hit by the commentary from William Dudley, and the greenback has the upper hand today.
Commodities
Gold has fallen to its lowest level since late May, as the hawkish language from the Federal Reserve last week is putting pressure on the metal. The Fed’s announcement that they will begin reducing the size of their balance sheet this year came as a bit of surprise to traders as they were hoping for a ‘dovish hike’. The US central bank also increased their growth outlook, while lowering their inflation forecast. The message from Fed Chair Janet Yellen, is they intend to tighten their monetary policy, even if inflation in the near-term is weak.
WTI and Brent Crude oil are edging higher but given the downward trend that they are in, traders are wondering how long the upturn will last? The energy market has been in a steady decline since the OPEC meeting in late May. Dealers are still concerned about the over-supply of oil, and some have their doubts whether all of the OPEC members will comply with the agreement to trim production. On Friday evening, the Baker Hughes rig-count report showed that the number of active rigs in the US rose by 6 to 747 rigs, it has now risen for 22 weeks in a row.
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