Hello traders, and welcome to Monday. This morning, we woke up to the results of the German elections, which were taken positively by the markets. As a result, DAX futures are up almost 1% ahead of the European session, signaling optimism in European equities. The U.S. futures are also in the green, but the sentiment there is slightly different. In the U.S., the positive movement is more of a rebound after the huge sell-off on Friday, rather than a direct response to the election news.
In general, European indices are showing more resilience and are outperforming their American counterparts. Year-to-date, the DAX is up 12%, highlighting strong investor confidence in the European economy, while the S&P 500 is up only 2%, reflecting cautious sentiment in the U.S. markets.
On the currency market, the euro is stronger, bolstered by the positive political outcome in Germany, which has reduced political uncertainty in the region. In addition to the euro’s strength, emerging market currencies from Europe, including the Polish zloty, Hungarian forint, and Czech koruna, are also climbing higher. On the other side, we see weakness in the Japanese yen and softness in the U.S. dollar, which are both showing a lack of momentum.
Moving to commodities, oil is declining and is struggling at key support levels, with a high possibility of a bearish breakout if the downward pressure continues. Meanwhile, metals opened the week with a neutral stance, showing no dominant direction so far, reflecting a wait-and-see attitude among traders.
Looking at the economic calendar, today is relatively quiet, as is typically the case on Mondays. The only notable event is the German Ifo Business Climate, which is expected to come in at 85.9. This data could provide further momentum for the euro and DAX, depending on whether it meets or exceeds expectations.
With political clarity from Germany and key technical levels in focus, today’s session may set the tone for the rest of the week. Traders should keep an eye on the U.S. indices to see if the rebound continues or if Friday’s bearish sentiment resurfaces.