NEXT PUBBLICATION: 23.06.2017
The first european political electoral events are now behind us, the results have been substasntially positive for the eurozone bringing some serenity to the financial markets. A significant upsurge was made by the EUR which gained about 6% against the US dollar and 3% against the swiss franc, while European stock exchanges, after an initial rise, returned to levels slightly higher than those before the French elections.
In this scenario, we believe that until after summer the financial markets will almost exclusively focus on the next moves of the European and American central banks.
In this regard, a further rate normalization by the Fed should already happen in the coming month, the ECB seems to be slower in this respect and we do not expect any uptick this year.
Voices coming from Frankfurt preach caution and insist on a continuation of the QE program for at least the whole current year.
Pressures by the most virtuous european nations on the European Central Bank, in particular Germany, have recently become more insistent. This could be due to the future political vote in Germany next October, but also to a clear position for the replacement of President Draghi end of the mandate (late October 2019) by a German candidate.
For the coming weeks, particular attention will be given to macroeconomic figures and forthcoming comments and meetings by central banks (for the European Central Bank also Draghi’s rhetoric has to be seriously taken into account).
We believe that in the coming weeks (up to at least June 8, the day of the next European Central Bank meeting) the EUR USD parity will move sideways, a consolidation after the rise of the last 10 days seems very possible.
Stock exchanges, especially European ones, but also the American one, could continue their uptrandes. The European recovery, the economic downturns, the attractiveness of the price and the growth of the profits of many of the companies in the old continent will further catalyze investors’ interest in weeks to come.
Although US stocks have already been very positive this year, we believe that the US market will be able to benefit from the impulses coming from the new administration; But attention to possible attacks on President Trump that could temporarily stop the uptrend.