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Top 5 Things to Know in the Market on Monday

EconomyMar 05, 2018 05:35AM ET
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© Reuters. Top 5 things to know today in financial markets - Here are the top five things you need to know in financial markets on Monday, March 5:

1. No Clear Winner In Italian Election

Italy’s national elections produced no outright winner, indicating that the country is set for a hung parliament as far-right, anti-establishment and euroskeptic parties staged a strong showing.

With two-thirds of the vote counted as of Monday morning local time, results showed that no one party or bloc would have a majority of votes enabling it to govern alone, likely ushering in a protracted period of political instability and tension in the euro zone’s third-largest economy.

The anti-establishment 5-Star Movement came out as a clear winner, looking set to become the largest single party by a wide margin, underscoring the continued power of populist parties in European politics.

The center-right bloc, made up of former prime minister Silvio Berlusconi's Forza Italia, and the far-right League and Brothers of Italy, is set to win most seats but is seen falling some way short of an absolute majority. But in a bitter personal defeat for the billionaire media magnate, his Forza Italia party was overtaken by its ally, the far-right, anti-immigrant League.

Italy's benchmark FTSE MIB index was down just 0.7%, after sinking nearly 2.5% to a six-month low at the start of trading.

The euro was up 0.1% at $1.2331, erasing all of its losses after sliding to a session low of $1.2155. Against the yen, it was unchanged at 130.25, recovering after hitting an intraday low of 129.36, its lowest level since late August.

2. Trump's Tariffs To Dominate Final Day Of NAFTA Talks

Ministers from the United States, Canada and Mexico meet in Mexico City on Monday to wrap up the latest round of NAFTA talks under the shadow of U.S. President Donald Trump's proposed steep tariffs on steel and aluminum imports.

Trump is expected to finalize the tariffs – 25% on steel and 10% on aluminum - later in the week, posing a tough challenge for U.S. Trade Representative Robert Lighthizer, Canada's Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo.

The Mexican and Canadian ministers are likely to press Trump's trade envoy on whether their countries will be excluded from the blanket tariffs.

The NAFTA talks are going slowly and the Mexico City round - the seventh of eight planned sets of negotiations – has so far produced little substance.

3. Global Stocks Mixed Amid Italy Uncertainty, Trade War Talk

Global equities were mixed in cautious trade, as investor nerves remained on show amid continued fretting about the potential for a full-fledged trade war and as Italy headed toward a hung parliament.

Asian shares stumbled to near three-week lows, with South Korea's KOSPI and Japan's Nikkei 225 faring the worst, closing down around 1.1% and 0.7% respectively.

In Europe, nearly all the continent's major bourses traded in positive territory, after spending most of the morning lower. The pan-European Stoxx 600 index, the region's broadest measure of share prices, rose around 0.6%, with most sectors in the green.

Meanwhile, on Wall Street, U.S. stock futures pointed to a flat open, with the three benchmark indices managing to recoup a major chunk of their overnight losses.

Dow futures were down 30 points, or around 0.1%, paring back a more-than-180-point drop seen on Sunday night. S&P 500 futures dipped 3 points, or about 0.1%, while Nasdaq 100 futures rose 6 points, or roughly 0.1%.

U.S. stocks logged hefty losses last week, with the Dow dropping around 3%.

4. OPEC, U.S. Shale Firms To Meet For Dinner

Oil ministers from the Organization of the Petroleum Exporting Countries (OPEC) and other global oil players are set to gather in Houston as CERAWeek, the largest energy industry conference, begins on Monday.

OPEC Secretary General Mohammad Barkindo and other OPEC officials are expected to hold a dinner Monday night with U.S. shale firms on the sidelines of the conference.

Rising U.S. shale oil production has been a drag on the OPEC's commitment to erode a prolonged global oil glut and prop up prices.

U.S. WTI crude futures tacked on 45 cents, or 0.7% to $61.70 per barrel, while London-traded Brent crude futures were at $64.72 per barrel, up 35 cents, or 0.6%.

5. China Kicks Off Its National People's Congress Meeting

China's National People's Congress officially kicked off with over 3,000 lawmakers descending on Beijing, where the country's rubber-stamp parliament is expected to eliminate the two-term limit for the presidency.

Continuing a campaign to reduce risks in China's financial system, Premier Li Keqiang also set a target for economic growth for 2018 at "about 6.5%," a slight recalibration from last year's objective of "around 6.5% or higher if possible."

Li also said China has cut its budget deficit target for the first time since 2012, suggesting Beijing will be more watchful of fiscal spending while not tapping the brakes so hard that it risks a sharper slowdown.

The two-week long political meeting is used by leaders to set policies for the year and detail plans to curb financial risk, air pollution, and excess industrial capacity.

Top 5 Things to Know in the Market on Monday

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