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April 25, 2017

Time (GMT) Currency Event Previous Forecast
All Day EUR Italian Bank Holiday
08:30 GBP Public Sector Net Borrowing 1.1B 2.6B
14:00 USD CB Consumer Confidence 125.6 123.7
14:00 USD New Home Sales 592K 590K

 

Global Commentary

Most Asian markets gained on Monday as a risk-on trade sentiment took over following the weekend victory of centrist candidate Emmanuel Macron in the first round of French presidential elections over the weekend.  Mainland China’s Shanghai Composite was the exception, falling 1.37% and continuing its downward trajectory as Chinese investors worry about potential government actions meant to reduce risk.  Japan’s Nikkei had an opposite reaction, gaining 1.37% for the session as the Yen plummeted versus rival currencies in response to an unwinding of safe haven positions.  In Australia the S&P/ASX 200 finished 0.30% higher, and the Hang Seng in Hong Kong shrugged off weakness from the manland to finish up by 0.41%.  In Singapore the Straits Times Index advanced 0.13%, while the Kospi in South Korea added 0.40%.  European markets soared higher, closing at a 16 month high and making the best daily gain in a year as investors reacted to prospect for market friendly Emmanuel Macron becoming the next president of France.  The Stoxx Europe 600 finished the day with a stunning 4.76% gain, with Germany’s DAX gaining 3.37%, and the CAC 40 in France advancing 4.14%.  In London, the FTSE finished 2.11% higher as investors there also cheered the results of the first round French elections.  U.S. markets finished broadly higher as well, with risk appetite retuning the investors as a result of the French election results.  At the close the S&P 500 was higher by 1.08%, the Dow added 1.05%, and the Nasdaq posted a 1.24% gain.

 

FOREX

EUR – The Euro was substantially stronger against rival currencies at the close Monday as it began the day with large gaps higher in response to the first round presidential elections in France.

GBP – The Pound was mixed on Monday as it firmed against the Yen, but softened versus the USD and Euro.  The British currency also showed weakness late in the day as it had gapped higher versus the Yen, but gave most of those gains back during the day’s session.

USD – The USD firmed against the Yen and Pound on Monday, but finished softer versus the Euro.

JPY – The Yen softened broadly against rival currencies on Monday as a drop in risk aversion had traders closing out safe haven positions.  We may get a bounce in the Yen on Tuesday however, as the Yen was strengthening late in the session Monday.

TRY – The Lira firmed broadly on Monday as the results of the French first round presidential elections caused increased interest and demand for emerging market assets.

RUB – The Ruble firmed against most major currencies on Monday in response to increased demand for emerging market assets, but versus the Yen the Ruble was close to unchanged after a volatile session.

 

Commodities

Metals – The drop in risk aversion across the globe following the outcome of the French elections sent precious metals, especially gold, skidding lower on Monday.  Gold for June delivery dropped $11.60, or 0.9%, to close at $1,277.50 an ounce, but was off its session low of $1,266.  May silver ended little changed at $17.86 an ounce.

Oil – Crude erased early gains and finished lower on Monday as concerns over rising U.S. production continued to weigh on the commodity.  West Texas Intermediate crude futures for delivery in June fell $0.39, or 0.8%, to finish at $49.23 a barrel after trading earlier in the session back above the $50 a barrel mark.

 

Indices

S&P500 – The benchmark U.S. index jumped higher at the open Monday as investor risk appetite returned following the results of the first round of the French presidential election, which promises to see a market friendly president elected in France later this year.  The market dipped slightly around noon, but then recovered to move back to session highs as it closed out the day with a 1.08% gain.

DAX – The DAX jumped higher at the open in response to the French election results, and continued edging higher throughout the session as risk appetite returned for investors.  Banking and financial issues led the charge higher, as France’s Emmanuel Macron is seen as market friendly.  By the end of the session the DAX was 3.37% higher.

Nikkei – The Nikkei jumped higher at the open Monday as investors reacted to a sharp drop in the Yen against the USD and other rival currencies.  The Yen remained weaker throughout the day as risk appetite climbed, and the Nikkei held onto early gains.  At the close the Nikkei was higher by 1.37% as it closes in on the 19,000 level.


Stocks

McDonald’s Corporation – Shares of the quick service food company rose to a new record high on Monday as the broad based rally in equities helped continue the rally in the stock ahead of its earnings release on Tuesday.  Analysts are expecting earnings to come in at $1.34 a share versus the $1.23 a share reported in the same quarter last year.  They also expect a 1% increase in same store sales.  McDonald’s has beaten analyst estimates in the past seven quarters, and with the strength of its menu deals and new technology, there is a good chance it will beat expectations again, giving the stock a further boost into uncharted territory.  

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