A look at the day ahead in European and global markets from Stella Qiu.
Shock at the attempt to assassinate former President Donald Trump is driving markets this Monday. For traders, their initial reaction has been to buy the U.S. dollar and bitcoin and sell longer term U.S. Treasuries — the so-called Trump-victory trades — as the incident galvanises his chances of winning back the White House.
Futures for 10-year Treasuries slipped, pointing to higher yields. Investors have tended to react to the prospect of a Trump win by pushing Treasury yields higher, in part on the assumption his economic policies would add to inflation and debt.
Federal Reserve Chair Jerome Powell speaks later in the day, and that’s an equally high-stakes event that could sway bets of a September rate cut.
Europe is headed for a drop at the open, with EUROSTOXX 50 futures down 0.5%. Euro zone industrial production data is due later in the day where economists are looking for a 1.9% drop for April, which will feed into expectations around the European Central Bank Thursday rates review.
ECB chief Christine Lagarde also speaks on Monday, but the upcoming rate decision is unlikely to surprise markets which see a 95% chance of a steady 3.75% policy rate. The policy statement will stress that inflation is coming under control but remains resilient, and upcoming data will be key for timing the next rate cut.
Also coming up are earnings results from Wall Street giants BlackRock Inc and Goldman Sachs on Monday. The expectations will be high after their rivals Citigroup and JPMorgan reported huge growth in investment banking revenues.
Back in Asia, Chinese data showed it missed growth expectations in the second quarter, underlining the need for more stimulus as a key leadership meeting third plenum gets under way in Beijing.
Also worrying was data showing home prices fell at the fastest pace in nine years in June, highlighting the continued strains in the property sector. Still, the People’s Bank of China kept a key policy rate unchanged, signalling no intention to cut benchmark lending rate this month.
Key developments that could influence markets on Monday:
– ECB President Christine Lagarde to speak at Eurogroup meeting in Brussels
– Euro zone industrial production data
– BlackRock, Goldman Sachs earnings results
– Fed Chair Jerome Powell interview at the Economic Club of Washington
– Fed San Francisco President Mary Daly speaks
(Reporting by Stella Qiu; Editing by Jacqueline Wong)
