European futures are trading higher and traders are glad that the US non farm payroll sell off was filtered by the long weekend break. It was an absolute panic on Friday and the U.S. indices dropped like a rock on the back of the news the disheartening economic data. Although, it took them a while to digest the news that Fed are still data dependent and any weakness in the economic data is equal to the presence of cheap money.
The comment by the Fed officials, Mr Dudley, have further embolden those views, and now we have a question mark on the summer rate hike. A few more speeches in a similar tone by some other officials could further fuel up this speculative behaviour. Nevertheless, this makes the divergence in the global Central bank’s policies, which is a concern for many, a lot less stressful and could ease up those tensions. As a result, we should see some new capital commitment by the investors.
Greece stayed in the headlines over the long weekend as the Greek finance minister refused to take out any time for his leisure and was in a constant battle to assure his country’s creditors that they will make the payment to the IMF on time. However, it seems highly unlikely how that pot will be filled with the Euros, given the capital flight is on its peaks and the government is struggling to pay its employees. Although, investors may not take the IMF default incident a unique and a first event in the history,because in the past such events have taken places, but perhaps, the more focus will be on the consequences of this event. History tells us that such events are followed by the lack in depositor confidence, a cut down in country’s rating and further tighter grip around lending criteria that is if someone is willing to lend despite higher borrowing cost.
Mergers and accusation news is back today in full throttle after FedEx has announced their desire to take over TNT express. Although it makes sense as it will make the process more streamline and will also reduce the cost for the company however, the TNT shareholders may try to squeeze out a little more despite the offer price is nearly 33% higher than the share closing price.
As for economic news, we have PMI reading for the eurozone and the UK, France and Germany will have their prints this morning. Although, the pound may still remain under pressure due to upcoming elections but the euro could move higher on the back of good readings. The lower euro and the ECB QE are both strong tail winds which so far have proven to ignite some growth in the eurozone.