Markets are kicking off the week with some big news from all over the globe. News of Germany’s election results and Japan’s latest political developments are taking much of the focus of investors and traders. Later today, Central banks officials from the U.S. and the Eurozone will announce their latest economic policies. Here are all the big headlines of today’s trading day.
1. Euro dives on German elections
The euro started the week with a big drop, as investors digested elections in Germany over the weekend, which showed surging support for a far-right party that left Chancellor Angela Merkel scrambling to form a governing coalition.
Despite winning a fourth term in office, Merkel's bloc slumped to its worst result since 1949 and her current Social Democrat coalition partners said they would go into opposition after tumbling to a post-war low of 20.5%.
The nationalist Alternative for Germany won around 13% of the vote, above what polls had predicted. They will become the first far-right party to enter the German parliament since the 1950s.
2. Global stocks move lower
Global stock markets were mostly lower in cautious trade, as investors digest elections in Germany and New Zealand over the weekend, while focusing on developments in Japan.
Asian shares closed on a relatively mixed to negative note, with benchmarks in greater China remaining on the back foot following S&P's downgrade of the Asian nation's sovereign rating late last week.
In Europe, shares were in the red in mid-morning trade, with financials leading losses.
Meanwhile, U.S. stocks pointed to a modestly lower open on Wall Street, with the Dow futures pointing to a loss of around 0.1% when the market opens.
Investors are also waiting for fresh comments from key central bank officials from the U.S. and the Eurozone for further signs that the era of easy money may be coming to an end.
Last week, the Fed announced it would begin trimming down its $4.5 trillion in assets and signaled it will likely raise rates again this year.
Meanwhile, European Central Bank President Mario Draghi is due to testify about the economy and monetary developments before the European Parliament Economic and Monetary Affairs Committee in Brussels at 13:00 GMT. Draghi indicated last month that the ECB could start tapering its massive stimulus program as early as October.
3. Japan’s snap election plan
Politics were also in the spotlight in Japan, with Prime Minister Shinzo Abe announcing at a press conference that he plans to dissolve parliament on Thursday and call a snap election for next month.
The move comes as Abe seeks to take advantage of improved ratings and opposition disarray, despite criticism that he is creating a political vacuum amid worries over North Korea.
A weekend survey by the Nikkei business daily survey showed 44% of voters planned to vote for Abe's Liberal Democratic Party (LDP) versus 8% for the main opposition Democratic Party.
The JPY was a touch weaker against the USD at 112.05.
4. Brexit talks resume in Brussels
Brexit negotiators are set to resume talks in Brussels, with Britain's Brexit secretary David Davis and chief European Union negotiator Michel Barnier scheduled to hold a fourth round of talks.
The renewed talks come three days after a closely watch speech by British Prime Minister Theresa May gave few new indications on how Brexit will proceed.
May proposed a transition period of around two years after UK leaves the European Union, during which time access to the single market will continue on current terms. Barnier said that May's speech was "constructive", but he wanted to hear firm offers.
The British Pound was a shade higher against the dollar at around 1.3530, recovering from moderate losses posted on Friday after ratings agency Moody's downgraded Britain's credit rating to Aa2.
