Concern! If there is one major theme fast approaching investors and traders as we blast through record levels for the major U.S. indices it has to be concern. Concern will rear its cautiously optimistic head this week as several major events will play out in the public limelight.
With U.S. equities continuing their yearlong rally into early June, a hiccup in the rally may come to pass this week. European Central Bank leaders may find themselves forced to change some of the language in its policy statement. While nothing is expected to change with regards to the ECB’s easing policy the language may change because of the recent run up in the euro, up nearly 1% in the past week and to a seven-month high. The ECB has consistently stated that interest rates will remain at its current level or lower. However, due to the run up in the Euro recently, the “lower” portion of the central bank’s statement may be dropped. This is something that could adversely affect European equities in the short run. That affect could also mirror a like sentiment for a short period of time in U.S. equities as well.
Another variable that will come into play this week, centered on the surrounding Euro Zone arena, is the snap election called by U.K.’s Prime Minister Theresa May. What was once thought to be a slam dunk for May is now called into question as the Prime Minister’s lead has shrunk dramatically in recent weeks and days and as May’s rating has turned negative for the first time since winning the role of Prime Minister last year. A Survation poll showed her Conservative Party’s lead had dropped to a new low of just one percentage point. Having noted the Survation poll, other polls still show May with a dwindling, although decent lead. While May is still expected to win the election, obtaining a majority is now very much in question. If Britain is thrown into political deadlock ahead of formal Brexit talks with the European Union on June 19th, this could spell trouble for the nation.
