The DAX index has lost ground in the Monday session, dropping 0.91 percent. The index is currently at 12,700.50 points. On the release front, there are no German or Eurozone events. On Tuesday, Germany and the Eurozone will release ZEW Economic Sentiment reports, and Germany will also publish WPI.
The German stock markets are down on Monday, following sharp losses on the Nasdaq, which dropped 1.8% on the Friday session. Major technology stocks such as Facebook, and Google were all down by more than 3 percent, and Apple led the downturn with losses of close to 4 percent. German financial stocks were lower on Monday – Deutsche Bank is down 1.23%, while Commerzbank has dropped to 1.03 percent.
In contrast to the election shocker in the UK, there was little suspense in the first round of French parliamentary elections, as President Emmanuel Macron led with 28% of the vote. Voters will determine the makeup of the 577 seats in the National Assembly, with Macron expected to win a huge majority in the second round. Macron is expected to put forward legislation to revamp labor laws, which will not sit well with the powerful labor unions. Any changes to France’s generous employment benefits is bound it be contentious, but a strong majority in parliament will make it easier for Macron to push through reforms.
As expected, the ECB did not announce any changes to monetary policy at its June meeting. However, the ECB did tweak its language in the rate statement and in Mario Draghi’s follow up comments. The ECB kept the benchmark rate pegged at 0.00% and maintained its asset-purchase plan (QE) of EUR 60 billion/month. The cautious ECB did, however, remove its guidance on rate cuts, as the ECB rate statement said that it expected interest rates to remain at "present levels" for an extended period of time. This was slightly more hawkish than the April statement, which said that policymakers expected rates to remain at present or lower levels" for an extended period. As well, Draghi characterized risks to the economy as "broadly balanced", compared to previous warnings that risks were "tilted to the downside. The subtle nuance in wording appears to be a nod to improving economic conditions in the euro-area, and could be a sign that the ECB may look to wind up its stimulus program before it terminates in December, if the economy continues to improve. The ECB has revised upwards its growth forecast for 2017 and 2018, although it has lowered its inflation forecast.
