The markets in Asia have been carefully monitoring the aftermath of the rise of right-wing parties in the European Union and how it might affect the unity of the bloc. Despite this uncertainty, EUROSTOXX 50 futures managed to increase by 0.2%, showing some stability after a slight decline on Monday. Similarly, the FTSE futures remained relatively unchanged. The situation in Europe has also affected the euro, which held steady at $1.0766, slightly above the one-month low of $1.0733.
French President Emmanuel Macron has been attempting to rally left-wing and centrist parties against the right-wing surge in Europe, but his efforts have so far been largely unsuccessful. The first opinion polls indicate that the far-right National Rally party could emerge victorious in the snap election, albeit falling short of an absolute majority. This uncertainty in European politics has created a sense of unease in the markets, resulting in mixed performances across Asia.
With the Federal Reserve meeting scheduled for Wednesday, analysts are revising their expectations for interest rate cuts. Previously anticipating three rate cuts for this year, market participants are now speculating about the possibility of only two cuts, or even just one. However, there is a concern that a reduction in cuts this year could lead to a more aggressive easing in the future, with projections potentially shifting to four cuts from three. Additionally, the Bank of Japan is set to hold its meeting on Friday amid speculations about tapering monthly bond purchases and a potential hike in July.
The markets also showed a lackluster response to Apple’s unveiling of its long-awaited AI strategy, which incorporates “Apple Intelligence” technology into various applications. Despite this announcement, Apple’s shares experienced a slight decline of 0.3% in after-hours trading. Some analysts remain optimistic about the potential of this new software to incentivize customers to upgrade their hardware, particularly to iPhone 15 Pro or Pro Max.
On Tuesday, several key developments could shape the direction of the markets. These include the release of UK May Claimant count, April wage, and unemployment data. Additionally, various ECB officials such as chief economist Philip Lane and French central bank chief Francois Villeroy de Galhau are scheduled to speak. The Bank of Finland will also hold a press conference on the economic outlook for Finland. Lastly, the U.S. markets are expected to react to these developments as they unfold.