Stocks and commodities have been steady to start the new trading week. Traders have focused their attention on currency markets in the wake of election results and other political developments from around the world.
The euro is selling off in the wake of German election results. Chancellor Angela Merkel's CDU-CSU alliance came out on top, but their support plunged to 32%, its worst showing in more than 50 years, down from 40% in the last election. The socialists dropped to 20% support and announced they will leave the grand coalition, leaving Merkel to scramble for new partners. The right wing Alternative for Germany party exceeded expectations with its support jumping from 4% to 12%, a clear rejection of Merkel's wide-open immigration policies.
Other factors weighing on the euro include ongoing political turmoil in Spain over the Catalan independence referendum, which had the IBEX 35 Futures down over 1% this morning. Also, Italy's Euroskeptic Five Star Movement elected a new PM candidate over the weekend.
On the other hand, sterling is climbing this morning, heading toward the next round of Brexit talks. The street continues to respond favourably to U.K. Prime Minister Theresa May's speech last Friday, which opened the door to progress on negotiations without giving away the store.
The New Zealand dollar was hammered to start to week. The conservative National Party won its weekend election but failed to capture a majority. The Japanese yen was steady after Prime Minister Shinzo Abe called a snap election, as had been recently rumoured.
Apple (NASDAQ:AAPL) could come under pressure today as concerns about its new products shift from the struggling iPhone 8 to the flashier iPhone X. Apparently, Apple has asked its suppliers to withhold shipments and only send about 40% of what was initially expected. Reports also suggest some component suppliers are struggling to meet even the lower rate. Continued struggles at Apple and other tech leaders could impact Nasdaq Inc (NASDAQ:NDAQ) trading.
As the week progresses focus may shift from elections to central banks and trade talks. A ton of Fed speakers are on tap for this week, headlined by Chair Janet Yellen. Also Bank of Canada’s Stephen Poloz, Bank of England’s Mark Carney and ECB’s Mario Draghi are all also out talking this week.