Trump Prospects Lift Dollar, Yen Hits 38-Year Low

France's CAC 40 surged over 1% as markets reacted to the smaller-than-expected margin of victory in the first round of  the election. The yen hit a near 38-year low against the dollar due to higher US yields and the implications of a Trump presidency. Meta Platforms faced antitrust charges from the European Commission, following similar actions against Apple and Microsoft.

Equities

The FTSE 100 remained flat, narrowly ending a four-session losing streak, while the mid-cap FTSE 250 dropped 0.3% to 20,222.08 points. Housebuilders gained 1% following a Nationwide report showing a small rise in British house prices in June despite higher interest rates. Precious metal miners and oil stocks rose over 1% each, driven by higher gold and oil prices. Anglo American slipped 2.8% after suspending production at its Australian coal mine due to an underground fire.

In the US, megacap growth stocks like Apple and Tesla boosted the Nasdaq to a higher close, while the Dow and S&P 500 saw slight gains in light pre-holiday trading. Apple rose 2.9%, Microsoft climbed 2%, and Amazon increased by 2.2%, leading the Nasdaq's rise.

Tesla surged 6.1% ahead of second-quarter vehicle delivery data. Advanced Micro Devices and Arm Holdings both fell around 2.9%, dragging the Philadelphia Semiconductor Index close to a one-week low. Real estate stocks dropped nearly 1% due to rising US Treasury yields, but higher yields benefited banks, lifting the S&P 500 banks index to a monthly high.

JP Morgan Chase hit an all-time high after raising its dividend and authorising $30 billion in share buybacks. Chewy dropped 6.7%, reversing early gains despite stock influencer Keith Gill's disclosure of a 6.6% stake in the pet products retailer.

Manufacturing PMI data showed contraction for the third consecutive month in June, with prices paid dropping to a six-month low, which was seen as a positive sign for the Federal Reserve's inflation battle. Traders maintained their expectations for two interest rate cuts this year, starting from September. Upcoming economic data includes JOLTS job openings, ADP employment, factory orders, ISM services PMI, and non-farm payroll data.

Forex & Commodities

The US dollar reached a 38-year high against the yen, hitting 161.745 yen, driven by a rise in Treasury yields. Analysts linked this to expectations of a potential Trump presidency and subsequent inflationary policies. The yen's weakness boosted Japan's Nikkei index above the 40,000 mark, while other regional markets struggled.

Gold prices slipped 0.2% to $2,326.82 per ounce, with US. The strong dollar and rising Treasury yields made gold less attractive. Traders are watching for cues from Federal Reserve Chair Jerome Powell's speech and upcoming US employment data, including the JOLTS job openings report, ADP employment data, and non-farm payroll figures.

Oil prices held near two-month highs due to expected demand from the summer travel season and potential US interest rate cuts. Brent crude rose 0.25% to $86.82 per barrel, while US West Texas Intermediate crude increased by 0.17% to $83.52. The market remains concerned about potential disruptions from Hurricane Beryl and geopolitical tensions between Israel and Iran.

The euro eased to $1.0727, and sterling fell to $1.2633 amid market reactions to political developments in France and expectations of further easing in China's yuan, which reached a seven-month low at 7.3085 per dollar.