The French CAC40 rose slightly this month and is up nearly 10% since the start of the year. This is thanks in part to the improved performance of US indices, with the S&P500 and the Nasdaq hitting new highs. The CAC40 has risen a total of 17 times in the month of May for the past 30 years. However, this has often been the precursor to a seasonal decline in equity markets, inspiring the well-known trading adage, "Sell in May and Go Away."
Will traders do likewise this year? Or, with a series of surprises possible, is the question: Is it too soon to sell in June?
Traders are currently anticipating two crucial events: the meetings of the European Central Bank (ECB) and the Federal Reserve of the United States (Fed) which will take place on June 8th and June 13th-14th, respectively.
ECB President Mario Draghi has warned that the inflationary outlook and prospects for economic recovery in the Eurozone remain fragile. He recently stated that “downside risks to the growth outlook are further diminishing, and some of the tail risks we were facing at the end of last year have receded measurably. The fact that domestic consumption and investment are the main engines driving the recovery makes it more robust and resilient to downside risks, which relate predominantly to global factors.”
Eurostat figures released yesterday showed that EU prices increased by an average of 1.4% in May, down from 1.9% in April. However, inflation is still lower than expected, which could reduce pressure on the ECB to dismantle its ultra-accommodative monetary policy measures, involving an asset purchase program costing €60 billion per month.
The latest FOMC minutes showed that Fed officials were waiting for more signs of weakness in the U.S. economy before deciding to tighten monetary policy further. Earlier this week, Federal Reserve governor Lael Brainard said that an interest rate hike is "likely appropriate soon." She noted, however, that low inflation in the United States could lead the Fed to reassess the appropriate pace of normalizing its monetary policy. Traders are now wondering whether the status quo will be maintained in June.
The Fed relies heavily on inflation figures when setting interest rates. Its current target is an inflation rate of 2%, but according to Bloomberg, this goal has been achieved only once since 2012.
To strengthen her position in Brexit negotiations with the European Union, Theresa May announced on April 18th that an early election would take place on June 8th. May's Conservatives currently hold 330 seats in the 650-seat House of Commons, but the upcoming vote could see her win an additional 50, despite recent poll gains by the Labour Party.
With political uncertainty in the United Kingdom and French legislative elections in the wake of Marine Le Pen’s defeat to Emmanuel Macron, there could be pronounced market volatility in June. Have traders decided to sell in May and go away? Or is it still too soon to sell in June?
Will traders do likewise this year? Or, with a series of surprises possible, is the question: Is it too soon to sell in June?
Traders are currently anticipating two crucial events: the meetings of the European Central Bank (ECB) and the Federal Reserve of the United States (Fed) which will take place on June 8th and June 13th-14th, respectively.
ECB President Mario Draghi has warned that the inflationary outlook and prospects for economic recovery in the Eurozone remain fragile. He recently stated that “downside risks to the growth outlook are further diminishing, and some of the tail risks we were facing at the end of last year have receded measurably. The fact that domestic consumption and investment are the main engines driving the recovery makes it more robust and resilient to downside risks, which relate predominantly to global factors.”
Eurostat figures released yesterday showed that EU prices increased by an average of 1.4% in May, down from 1.9% in April. However, inflation is still lower than expected, which could reduce pressure on the ECB to dismantle its ultra-accommodative monetary policy measures, involving an asset purchase program costing €60 billion per month.
The latest FOMC minutes showed that Fed officials were waiting for more signs of weakness in the U.S. economy before deciding to tighten monetary policy further. Earlier this week, Federal Reserve governor Lael Brainard said that an interest rate hike is "likely appropriate soon." She noted, however, that low inflation in the United States could lead the Fed to reassess the appropriate pace of normalizing its monetary policy. Traders are now wondering whether the status quo will be maintained in June.
The Fed relies heavily on inflation figures when setting interest rates. Its current target is an inflation rate of 2%, but according to Bloomberg, this goal has been achieved only once since 2012.
To strengthen her position in Brexit negotiations with the European Union, Theresa May announced on April 18th that an early election would take place on June 8th. May's Conservatives currently hold 330 seats in the 650-seat House of Commons, but the upcoming vote could see her win an additional 50, despite recent poll gains by the Labour Party.
With political uncertainty in the United Kingdom and French legislative elections in the wake of Marine Le Pen’s defeat to Emmanuel Macron, there could be pronounced market volatility in June. Have traders decided to sell in May and go away? Or is it still too soon to sell in June?
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