European markets posted strong gains on Monday

Good morning folks!

Markets in the UK are set to play catch up this morning after the long weekend as other European markets posted strong gains on Monday. However despite the strong start to the trading week from a price point of view it could be that we are looking a fairly subdued start in terms of economic data and newsflow. With Mario Draghi set to give a speech later this afternoon on the state of the Eurozone economy all eyes will focus on hearing any hints on a change in monetary policy.
With the next meeting hinted at being that start of action from the ECB any dovish tones from the ECB President will likely cause a stir in the markets. We have actually seen a lull in markets since Mario Draghi’s surprise announcement that the June 6 meeting is likely to be the meeting where members act. Investors have almost shut up shop in preparation for what could be an enormously volatile time, and if it is volatility you are after the meeting on June 6th is what you have been waiting for. Whether there is a change or not the market’s will react, with either disappointment or with glee that the ECB members have finally realised the inflation pressures will not go away on their own. However before then there is still a lot of data to look out for which could be pivotal in the final decision from the ECB, so going into the next few weeks thinking that policy easing on June 6th is a given would be a huge mistake.

It has been a fairly damaging weekend for the EU and Europe in general as the European elections saw the European parliament packed full of those fighting to remove the respective countries from the single union. It wasn’t just in the UK where Nigel Farage and the UK Independence Party won a surprise amount of the vote. Votes in France showed a strong performance from the Eurosceptics, enough so that French President Francois Hollande came out calling for reform and a scaling back of powers by the EU as dangerous amount of people voted in support of far right and Eurosceptic parties.

All in all we are likely to see a very subdued start to the trading week with very little for traders to get their teeth into.
With this in mind we can expect the likes of the European elections results and the results of elections in Ukraine to be a major focus for investors. It was just on Friday that Russian president Vladimir Putin said that Russia would look to work with the new democratically elected President of Ukraine. It won’t be until a bit later in the week when the likes of US GDP and consumer confidence gives us something to work with on the economic calendar so we can expect quite low volumes at the start of the trading week as the markets continues to gear up for the ECB in a couple of weeks.

Ahead of the open we expect to see the FTSE open higher by 25 points with the DAX down 17 points.