A look ahead at European and global markets from Kevin Buckland
How France’s hastily assembled party works will become clear today, when candidates have until Tuesday evening to exit Sunday’s crucial second-round vote to leave only those with a good chance of winning.
It follows a strong showing by the eurosceptic National Rally’s (RN) in the first round last weekend, leading among its rivals to prevent Marine Le Pen’s party from taking a majority.
That means fielding only the best-placed opponent of the RN candidate, regardless of party — even if that candidate comes from the equally divided far-left organization France Unbowed (LFI).
Currently, the main case of the market appears to be a suspended parliament, although it may be at risk of political paralysis during the remainder of President Emmanuel Macron’s term until 2027.
Stocks rallied, especially in France where the figure jumped more than 1%. Another pullback could be the current reaction on Tuesday morning, with pan-European futures down around 0.1%.
The euro remains strong, even despite the dollar’s renewed strength. The greenback’s other rivals are not showing as much resilience, notably the yen, which is still tied close to a 38-year trough, keeping traders on high alert for another round of Japanese official intervention.
The dollar-yen pair is very sensitive to the long-term US maturity, which has increased amid the growing risk of a second presidency of Donald Trump, traders and analysts who equate to higher taxes and greater spending.
US currencies and commodities have also been lifted based on the view that the Federal Reserve’s policy will not ease at a rapid pace, as inflation is still firmly attached and the job market is strong.
The series of potentially important employment data begins on Tuesday with the JOLTS jobs opening report, a Fed favorite, followed by the ADP numbers the following day and the all-important monthly payrolls figures on Friday.
Fed Chairman Jerome Powell has a chance to present his latest economic outlook when he takes part in a panel at the ECB’s forum in Sintra, Portugal, later in the day.
The data calendar is relatively light in Europe, with euro zone inflation figures for June and the unemployment rate for May.
Elsewhere, Big Tech may be wondering who is next in the crosshairs of the European Commission, after Meta Platforms (NASDAQ: ) was charged with antitrust violations on Monday.
Apple (NASDAQ: ) and Microsoft (NASDAQ: ) were both subject to regulatory directives last month over App Store rules and the integration of Teams with the Office 365 suite, respectively.
Nvidia (NASDAQ: ) is facing its first antitrust lawsuit, with sources telling Reuters that French regulators are preparing to charge the AI poster child for anti-competitive business practices.
Key developments that could impact markets on Tuesday:
-Deadline for the French elections in the second round
-Euro-zone flash HICP (June), unemployment rate (May)
-US JOLTS (May)
Fed Chairman Jerome Powell speaks at the ECB meeting
