A look at the day ahead in European and global markets from Stella Chiu.
The shock of the assassination attempt on former President Donald Trump is what’s driving markets on Monday. For traders, the initial reaction was to buy the US dollar and bitcoin and sell long-term US Treasuries — so-called Trump victory trades — as the incident boosts his chances of retaking the White House.
Futures on 10-year U.S. Treasury bonds fell, suggesting higher yields. Investors have tended to respond to the prospect of a Trump victory by pushing Treasury yields higher, in part because of the assumption that his economic policies would increase inflation and debt.
Federal Reserve Chair Jerome Powell speaks later today, an equally high-stakes event that could change bets on a September rate cut.
Europe is set to open lower, with EUROSTOXX 50 futures down 0.5%. Eurozone industrial production data is due later in the day with economists expecting a 1.9% decline in April, which will boost expectations for a European Central Bank interest rate review on Thursday.
European Central Bank President Christine Lagarde will also speak on Monday, but the upcoming interest rate decision is unlikely to surprise markets, which see a 95% chance of the rate staying at 3.75%. The policy statement will confirm that inflation is under control but still resilient, and upcoming data will be key to determining the timing of the next rate cut.
Also on Monday are Wall Street giants BlackRock and Goldman Sachs, with expectations high after rivals Citigroup and JPMorgan reported massive growth in investment banking revenue.
In Asia, Chinese data showed second-quarter growth was below expectations, underscoring the need for more stimulus as the third economic leadership meeting gets underway in Beijing.
Data showing home prices fell at their fastest pace in nine years in June also raised concerns, highlighting continued pressure in the property sector. However, the People’s Bank of China left its key interest rate unchanged, indicating no intention to cut its benchmark lending rate this month.
Key developments that could impact markets on Monday:
– European Central Bank President Christine Lagarde will speak at the Eurogroup meeting in Brussels.
– Eurozone industrial production data
BlackRock and Goldman Sachs Earnings Results
– Interview with Federal Reserve Chairman Jerome Powell at the Economic Club of Washington
– San Francisco Federal Reserve President Mary Daly speaks
(Reporting by Stella Chiu; Editing by Jacqueline Wong)
