Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In the pre-opening, the European markets negotiated with contained gains. For political and economic reasons, today was the most awaited by investors because of the elections in the UK and the ECB meet, as well as the testimony of the former FBI director fired by President Trump. With regard to the legislative elections in England, it should be remembered that although the legislature should only end in 2020, Prime Minister Theresa May called early elections in order to reinforce her majority in Parliament and, consequently, her internal position in the conduct of the Brexit process. The polls open at 7:00 a.m. and close at 10:00 p.m. Regarding the possible reactions of the market to the outcome of the elections, opinions are divided. A minority victory of Congressmen or an indefinite result would, according to some investors, increase political uncertainty but on the other hand would increase the likelihood of a more conciliatory stance of the UK in the process of leaving the EU, called Soft Brexit. A victory for Theresa May would make the future English politician more crystalline but would reinforce the likelihood of a more intransigent UK position, dubbed Hard Brexit. Concerning the ECB meeting in Tallinn (Estonia), no changes are expected in the current monetary conditions, but there is an expectation of the statements made by Mario Draghi in order to try to gauge the future performance of the ECB. Markets are therefore awaiting news on macroeconomic forecasts. The big question is what will be the rhythm of monetary policy normalization, which will first happen by reducing the asset purchase program and later by the increase of the leading rates.
The US stock market ended yesterday’s session on a positive track as investors waited for the testimony of former FBI Director James Comey. In Washington, after two weeks of truce, Russia Gate will again take center stage. Former FBI Director James Comey will testify today (3 p.m.) on a Senate committee to clarify his position in the investigation into alleged Russian interference in last year’s presidential election and Donald Trump’s election campaign. James Comey was dismissed by President Trump last month, with the justification (now being investigated) of the former FBI Director not having abandoned, at the President’s request, the investigation into the relations between Russia and Michael Flynn, ex -Donald Trump’s National Security Advisor. It should be recalled that in spite of successive records, Wall Street has been particularly sensitive to political issues concerning the Trump Administration, as they may delay the discussion of the fiscal reform proposed by the Presidency, which was one of the first Catalysts of the shareholder rally. Meanwhile, yesterday, Donald Trump announced his choice to succeed James Comey in the lead of the FBI. On Twitter, he wrote that he will nominate Christopher A. Wray, “who was US Attorney General between 2003 and 2005, under the presidency of George W. Bush. At the same time, the news that will come from Europe today (UK elections and ECB meeting) should also capture some of the attention.
Asian markets closed with contained fluctuations reflecting a cautious stance on the part of investors awaiting not only for the three events taking place today in Europe and the US but also digesting news of Korea’s launching of ballistic missiles From north.