Weekend European Parliamentary election results saw a significant shift in voter sentiment away from incumbent parties, which led to Belgium’s prime minister resigning, and French President Macron launching a snap parliamentary election campaign in France. With political uncertainty increasing on the continent, the Euro has dropped 0.4% against both the US Dollar and the British Pound, and European indices have been falling led by a 1.6% plunge in Paris and a 0.5% fall in Frankfurt. London has lost a more moderate 0.2% today. With political uncertainty having increased in Europe, Gold has stabilized near $2,325/oz following Friday’s selloff, and Silver has bounced 1.4%.
US index futures are flat this morning as investors digest Friday’s nonfarm payrolls report and await Wednesday’s FOMC meeting and US consumer price index report. Although the Bank of Canada and the European Central Bank started on the road to easing with their first interest rate cuts in years last week, the party line from Fed members remains “higher rates for longer” and they have generally been talking down rate cut expectations.
Because of this divergence in tone among central bankers, the Fed’s “Dot Plot” of interest rate forecasts may attract particular attention from investors trying to determine when or if the Fed is still thinking about cutting interest rates this year. Ahead of the Fed, the US CPI inflation report may give an idea of whether the Fed is even in a position to declare victory against inflation, indicate it is making progress, or losing ground.
It’s a quiet morning for corporate news, with the most notable event being that Nvidia* starts trading on a post 10-for-1 split basis today. There are a couple of technology earnings reports of note including Oracle tomorrow, Broadcom* on Wednesday, and Adobe, who appears to be facing a customer revolt, on Thursday.
Commodities are bouncing back today with US Crude Oil up 1.0%, Natural Gas up 4.9% and Copper up 1.3%. The US 10-year treasury note yield is climbing again, trading above 4.45%.
*Shares of Nvidia and Broadcom are held in portfolios managed by SIA Wealth Management.