French Election Hangover: Euro Slips, Markets Look for Stability
European markets experienced a rollercoaster ride this week, with the euro initially falling due to concerns about France’s post-election political landscape. No single party secured a majority in the recent French election, raising the spectre of a hung parliament and potential instability. This uncertainty caused the euro to slip as much as 0.4%, though it later recovered some losses.
Mixed Fortunes in Asia
Asian markets presented a mixed picture. The tech sector provided a bright spot, with Taiwan’s benchmark index climbing on the back of a strong performance by Taiwan Semiconductor Manufacturing Co. (TSMC). TSMC’s stock hit a record high after receiving a price target upgrade from Morgan Stanley. However, overall gains were modest, with the broader MSCI Asia-Pacific index showing a slight advance. China’s CSI 300 index continued its downward trajectory, extending its losing streak to eight consecutive weeks.
Labour Unrest in South Korea, Fed Policy in Focus This Week
The upcoming week promises to be eventful, with several key events on the economic calendar. Labour tensions in South Korea are set to rise as Samsung Electronics Co. workers embark on a strike, potentially disrupting production at the tech giant.
In the United States, Federal Reserve Chair Jerome Powell’s congressional testimony will be closely watched by markets. Investors are seeking clues regarding the Fed’s monetary policy direction, with recent signs of an economic slowdown fueling speculation about potential interest rate cuts later this year. A weak jobs report in June has bolstered this view, with analysts interpreting it as a signal that the Fed may adopt a more accommodative stance to bolster economic growth.
US Elections and Other Events to Watch
The upcoming US elections are also generating market buzz. While President Biden’s recent poll numbers offer a glimmer of hope for his re-election bid, some analysts see potential parallels with the 2016 election, where market volatility surged in the wake of Donald Trump’s victory. The potential implications of a Trump presidency on trade, immigration, and central bank independence are seen as potential sources of future market instability.
Rounding out the week’s agenda are rate decisions in New Zealand and South Korea, along with earnings reports from major US banks. The oil market will be keeping an eye on reports from OPEC and the IEA, along with the path of Tropical Storm Beryl as it approaches Texas. Gold prices, meanwhile, retreated slightly after reaching a six-week high last week.
