Financial market research and analysis

Asian markets climbed cautiously higher overnight in thin trading volumes after market closures in the US and the UK on Monday for public holidays. Trump’s comment that the US was not ready to make a trade deal with China had little impact on the market. Investors are waiting for fresh cues as trade tensions and weaker economic data have driven stocks over the past few weeks. The markets are pausing for breath from the trade tensions story but this should change as we move towards the G20 where hopes of a resolution should intensify.

Euro higher post EU elections

European stocks and the euro advanced on Monday in the wake of the European Parliamentary elections. Euro traders breathed a sign of relief following the results of the European Parliamentary elections after populist parties failed to score big wins. Whilst the centre bloc lost votes, the populist parties didn’t win sufficient seats to cause any major headache within the European Parliament. Populist parties still only make up around 25% of the parliament, which won’t create problems with legislation or pushing items through Parliament.

ECB President, who’s next?

The dust has barely settled on the European Parliamentary elections and euro traders are turning their attention towards the elections for the President of the ECB. This is lining up to be a close race and right now is too close to call. EU leaders will meet this evening to discuss the appointment.

This is a highly politicized appointment. It is most likely to be someone who knows the mechanics rather than an outsider being brought in. This makes the ECB unlikely to benefit from fresh blood. Germany, France and Italy will be trying to push for their own candidates such as Villeroy, Couere or Wiedemann. Even if the larger EU countries fail, the smaller one’s stand ready with candidates such as Rehn or Liikanean from Finland. Each candidate has a very different profile. Euro traders will be watching the race carefully as the results will impact on the future direction of monetary policy.

The pound remains depressed on no deal Brexit fears

The pound fell across Monday as investors digested Nigel Farage and the Brexit party’s victory in the European elections. The threat of a hard line Brexiter Conservative candidate replacing Theresa May has increased significantly after the Brexit party stormed ahead in the elections, whilst the Tories experienced their worst results in history. Keen to distance themselves from the failure to deliver on Brexit, candidates are pledging Brexit with or without a deal by the end of October.