U.S. stock futures edged lower on Monday with pending inflation figures and FOMC, following a week of gains. The market’s attention is now turning towards the Federal Reserve’s upcoming interest rate decision and the release of May’s inflation figures. Nvidia’s shares dipped by 0.2% as the company’s 10-for-1 stock split came into effect, setting the new trading price at approximately $120 per share after the split

The Asia-Pacific stock markets exhibited a mixed performance at the start of the week, reflecting a cautious sentiment after the U.S. jobs report surpassed expectations. The trading landscape was quieter than usual due to public holidays shuttering markets across Australia, mainland China, Hong Kong, and Taiwan. As the week unfolds, investor focus will pivot to Japan, with the nation’s first-quarter GDP figures slated for release on Monday, setting the stage for the Bank of Japan’s pivotal interest rate decision on Friday.

European equity markets experienced a downturn as investors digested the preliminary outcomes of the EU elections and the unexpected announcement by French President Emmanuel Macron for a snap parliamentary vote. The pan-European Stoxx 600 index declined by 0.6% as of 9:50 a.m. London time, while the euro weakened, falling 0.4% against the U.S. dollar and 0.3% versus the British pound. In France, the CAC 40 index saw a significant drop of 2% during the morning session, with financial sector stocks particularly hard-hit.

Economic Calendar

Earnings Calendar

Notable reports for Monday before the bell include FCEL & LOVE.  After the bell include CVGW & YEXT.

News & Technicals’

Toyota’s stock has experienced a significant downturn, dropping over 5% since May 31, which was the final trading session before a scandal emerged on June 3. Mazda’s shares have faced an even steeper decline, plummeting 7.7% since the same date. The turmoil extends beyond these two companies, as a comprehensive audit conducted by the transport ministry uncovered discrepancies in the certification applications of several other major automakers, including Honda, Suzuki, and Yamaha Motor. This revelation has cast a shadow over the automotive sector, raising concerns about regulatory compliance and operational integrity within these well-established brands.

In a bold political maneuver, French President Emmanuel Macron has initiated a snap national election, a move seen as a high-stakes gamble in response to the rising momentum of his adversaries. This decision follows the right-wing National Rally (RN) party’s significant electoral gain, securing around 31% of the votes in the recent European Parliament election, a figure that starkly eclipses the 14.6% garnered by Macron’s pro-European and centrist Renaissance Party and its affiliates. The financial markets reacted swiftly to the political upheaval, with France’s CAC 40 index falling 1.8% in early trading on Monday, and shares of French banks suffering a sharp decline. This confluence of political uncertainty and market volatility underscores the risks inherent in Macron’s strategic choice, which could redefine France’s political landscape.

The postponement of New York City’s congestion pricing initiative, as declared by Governor Kathy Hochul, has brought to light contrasting perspectives on the city’s economic trajectory. The suspension of the proposed $15 fee for daytime drivers entering the city south of 60th Street in Manhattan is a decision grounded in apprehensions about the city’s economic resurgence in the aftermath of Covid-19. While the move aims to alleviate immediate financial strains, critics argue that this short-term fiscal strategy overlooks the long-term economic implications, potentially forfeiting billions in revenue. This debate underscores the delicate balance between fostering economic recovery and implementing sustainable urban policies.

The gold mining sector is facing a challenging period, with the World Gold Council highlighting the industry’s difficulty in maintaining growth in production. The scarcity of new deposits is becoming increasingly apparent, as reflected in the marginal 0.5% increase in mine production in 2023 compared to the previous year. John Reade of the World Gold Council encapsulates the situation succinctly, noting the escalating challenges in discovering, licensing, funding, and managing gold mining operations. This trend signals a critical juncture for the industry, which must now navigate the complexities of resource depletion and the intensifying pursuit of the precious metal.

Uncertainty for the pending inflation figures and FOMC could make for a choppy beginning to the week as investors hurry up and wait. Corporate buybacks are also running out of time as companies will begin entering their blackout periods so don’t be to surprised if we see market breadth a bit lacking as summer trading begins.

Trade Wisely,

Doug