Europe has got off to a decent start on Monday and the U.S. is on track to do the same, up around one third of one percent ahead of the open.
What may be supporting markets this week is last week’s jobs report which many have perceived to have been weak enough to further warrant the Fed holding back on rate hikes. Of course, I remain unconvinced on this especially as wage growth was better than we were expecting and the average number of jobs being created is still very good, particularly given the low level of unemployment the U.S. now has. That said, the markets clearly believe otherwise and this may be supporting risk appetite early in the week.
Oil is on the rise again today, although interestingly this is not providing much of a lift to energy stocks early in the session. Prices have been boosted by reports that more than production in Canada may be off by more than one million barrels per day as a result of the fires in the oil sands region. Given the nature of the fires, there is no way of knowing when production will return to previous levels which could continue to support prices for now. The gains could have perhaps been larger had it not been for the replacement of Saudi Oil Minister, Ali al-Naimi, with Khalid al-Falih who is expected to continue to pursue the policy of maintaining market share and forcing out higher cost shale producers. A production freeze or cut now looks extremely unlikely at the OPEC meeting in June or at any point for that matter, in the foreseeable future.
On this data-light day, Greece will remain a hot topic as the country tries to secure the latest tranche of its bailout having passed extremely unpopular and controversial reforms through parliament. Syriza managed to pass pension cuts and tax hikes through parliament over the weekend, something it had previously insisted it would not do, which sparked mass protests outside of parliament. This could now open the door to an equally controversial agreement on debt relief, which has until now created divisions between Greece’s creditors, or at least that is the hope of Alexis Tsipras and the Syriza party. These talks could take some time though but I would assume that given the IMFs insistence on it and Tsipras possible committing political suicide by backing down on pensions, an agreement of some kind must be on the horizon.
For a look at all of today’s economic events, check out our economic calendar.