Moving markets today: Asian markets mixed amid Trump election speculation; yen near a 38-year low, oil holds two-month high; Focus on French election deadline and US Jolts report
US stocks closed higher on Monday despite Treasury yields reaching their highest levels in several weeks. Across Asia, stock markets showed varied performances, while crude oil prices edged up following strong gains in the previous session. The US dollar remained near a nearly 38-year high against the yen on Tuesday, bolstered by rising Treasury yields as investors speculated on the potential impact of a second Donald Trump presidency. Meanwhile, the euro held steady as French political parties collaborated to prevent the far-right National Rally (RN) from gaining political ground. Gold prices remained stable as investors awaited a speech from Federal Reserve Chair Jerome Powell. France remained a focal point for investors, and in the UK, all eyes were on Thursday’s elections, with forecasts indicating challenging prospects for the ruling Conservative party. Investors were particularly interested in upcoming US economic reports, including May job openings data and the June Nonfarm payrolls report. The FTSE 100 closed nearly unchanged on Monday, with early indications suggesting a subdued start to Tuesday’s trading session. Here are five key takeaways for your day.
UK shop price inflation hits lowest level since October 2021: BRC
Last month, prices in British retail shops saw their slowest increase in nearly three years, based on industry data that underscores a significant easing in inflationary pressures.
According to the British Retail Consortium’s report on Tuesday, annual shop price inflation fell to 0.2 per cent in June from 0.6 per cent in May, marking the smallest rise since October 2021.
Non-food item prices notably decreased by 1.0 per cent compared to a 0.8 per cent drop in May, influenced in part by promotions on TV sets timed alongside the Euro 2024 soccer tournament.
Meanwhile, food inflation continued its downward trend for the 14th consecutive month, slowing to 2.5 per cent from 3.2 per cent, Reuters reported.
ECB to take cautious approach on further rate cuts, says Lagarde
On Monday, European Central Bank President Christine Lagarde indicated that the ECB requires additional time to assess whether inflation is firmly moving towards the 2 per cent target.
She emphasized that economic conditions currently do not necessitate immediate rate cuts, noting, “It will take time for us to gather enough data to be confident that the risks of inflation exceeding our target have diminished.”
Lagarde also highlighted the strength of the labor market, suggesting that they can afford to wait for further information before making decisions.
Revolut reports record 2023 profit: CNBC
British fintech firm Revolut achieved a remarkable pre-tax profit of £438 million in 2023, driven by robust user growth and diverse revenue streams, CNBC reported on Monday. This is a significant turnaround from the previous year’s pre-tax loss of £25.4 million.
The company’s revenues also reached £1.8 billion, surpassing its earlier forecasts. Revolut is now aiming for a valuation exceeding $40 billion through a $500 million share sale, which would make it Europe’s most valuable startup.
What’s on the radar
On Tuesday, France will be a major focus for investors as candidates in about 311 of the nation’s 557 constituencies decide whether to run in the second round of elections on July 7.
In Europe, ECB Vice-President Luis De Guindos will deliver a speech, followed by President Christine Lagarde. Investors will also watch the release of June’s preliminary consumer price data for the euro area.
In the US, the Department of Labor will publish its JOLTS labor market report for May.
This week is critical for the UK, with voters going to the polls on Thursday to elect a new government. Current forecasts are grim for the ruling Conservative party.
Wall Street is gearing up for several key economic reports, including the Federal Reserve minutes, employment data, the final S&P US manufacturing PMI, and trade deficit figures. Of particular interest to investors will be the May job openings data and the June Nonfarm payrolls report.
Asian markets mixed amid Trump election speculation
The Dow Jones Industrial Average increased by 0.13 per cent to 39,169.52, while the S&P 500 rose by 0.27 per cent to 5,475.09, and the Nasdaq Composite jumped by 0.83 per cent to 17,879.30. The “Magnificent Seven” tech stocks all saw gains.
Treasury yields climbed as traders speculated about higher chances of Donald Trump being re-elected, with the 10-year bond yield rising 0.14 per centage points to 4.48 per cent, the highest in a month.
In Europe, EURO STOXX 50 futures declined by 0.24 per cent. The FTSE 100 remained nearly flat on Monday, up 0.03 per cent, but its futures indicated a 0.25 per cent drop to 8,193.0 points for Tuesday.
Asian markets were mixed. Japan’s Nikkei N225 gained 0.6 per cent thanks to rising domestic bond yields, and Hong Kong’s Hang Seng increased by 0.3 per cent due to stronger property shares. However, China’s CSI300 stayed flat, Taiwan’s TWII fell by 0.8 per cent, and South Korea’s Kospi KS11 dropped by 0.6 per cent.
The dollar strengthened slightly to 161.56 yen, close to the overnight high of 161.72 yen, a level last seen in December 1986.
The euro held steady against the dollar, slipping by 0.07 per cent to $1.0733 after reaching $1.0776 on Monday, its highest since June 13.
In the commodities market, crude oil prices continued to rise following Monday’s gains. Brent futures added 0.21 per cent to $86.78 per barrel, building on a 1.9 per cent rally, while US West Texas Intermediate (WTI) crude rose 0.13 per cent to $83.49, extending a 2.3 per cent increase from the previous session.
Spot gold remained steady at $2,332.27 per ounce, and US gold futures climbed 0.2 per cent to $2,342.70.