Wall Street closed higher on Monday as market participants anticipated the US Federal Reserve's upcoming rate decision and inflation figures, both set to be released on Wednesday. Fed Chair Jerome Powell and several Fed officials have consistently stated that they want to see inflation decrease "sustainably" to the central bank's 2% target before initiating rate cuts, suggesting that interest rates may need to remain elevated for a longer period.
The rand strengthened against major global currencies on Monday evening, pulling away from the session’s worst level, as investors closely monitored political developments. As the deadline for establishing a government of national unity draws near, local political parties are anticipated to continue their negotiations this week. “This comes after the ANC conducted an initial coalition engagement with the DA, EFF, IFP, Patriotic Alliance and the National Freedom Party. The DA and the IFP have agreed in principle to the ANC’s proposal, while the EFF has said that it would reject the GNU proposal if it involved the DA and the Freedom Front Plus.” Business Day reports. The FTSE/JSE All Share Index (ALSI) closed lower, posting a 0.40% decline.
Chinese markets were closed on Monday, observing the Dragon Boat Festival, after the US jobs report on Friday came in better than anticipated, indicating that hiring and wage growth increased in May. This led to mixed results for Asia-Pacific markets on Monday. Investors in Asia also evaluated Japan's revised first-quarter GDP figures that showed an annualised 1.80% drop, compared to market expectations of a 2% contraction.
European markets ended lower on Monday following reports of a snap legislative election announced by French President Emmanuel Macron after the far-right made some big gains in European Union polls. “President Emmanuel Macron dissolved the lower house of France’s parliament in a surprise announcement sending voters back to the polls in the coming weeks to choose lawmakers after his party was handed a humbling defeat by the far-right in the European elections Sunday. The legislative elections will take place in two rounds on June 30 and July 7,” according to Reuters.
The FTSE 100 closed 0.20% lower at 8 228 on Monday, continuing Friday’s decline. Investors are also looking forward to key UK economic data this week, especially wage and unemployment rate figures that will be released today.
In commodities, gold rose 0.25% to $2 310/oz while Brent crude gained 3.13% to $82.11.
