With the US and UK enjoying long weekends the market turned it’s focus to the continuing political situation in Italy with the country poised now for fresh elections after a coalition government couldn’t’ be formed. This news led to a drop in Italian bonds, pressure on the Euro and moves to the downside in the global stock markets. Oil also continued to slide lower as the US, Russia and Saudi Arabia all look to step up production as we move into the second half of the year. Asian markets are set to open on the back foot with the futures indicating a weak start in both the Australian and Japanese stock markets. This should keep the risk trades pressured to the downside although the market will be looking for fresh catalysts to propel the moves further.
Once again it’s fairly light on the ground in terms of fundamental economic data releases today and so focus will continue to remain on the various Geo-Political themes dominating market moves as we return to full liquidity conditions. The Italian situation looks set to continue to dominate in the European time zone but focus will remain on the on again off again US – North Korean summit and as well as the US-China trade relationship as we move through the Asian trading session. Sentiment does seem to be flipping on an almost daily basis at the moment and savvy investors will be looking to take advantage of this whilst still keeping an eye on the longer term trends.