Top 5 Things to Know in the Market on Monday

Top 5 Things to Know in the Market on Monday — These are the top 5 things to know about in the market on Monday, May 27. The New York and London stock exchanges are both closed today for public holidays.

1. Europe’s populist push fizzles

Mainstream political parties held the line in elections for the European Union parliament, as right-wing populists failed to make significant gains on their showing from five years ago, although traditional center-left and center-right parties leaked support to the Greens and other centrist blocs.

Results from the U.K. showed more voters defected to pro-Remain parties from the Conservatives and Labour than to pro-Brexit parties. The Brexit party of Nigel Farage emerged as the party with the most seats.

In Italy, speculation on new elections rose after the right-wing populist Lega gained at the expense of its partner in the government, the Five Stars Movement. The yield spread between Italian and German 10-year government bonds – a barometer of political risk in Italy – rose by a modest 2 basis points to 269 basis points. The euro was little changed at $1.1197.

2. Trump says not pursuing regime change in Iran

Crude oil prices fell to a two-month low after President Donald Trump said he’s not looking for regime change in Iran. The comments eased some of the concerns about geopolitical risk, one of the few factors supporting crude prices as the worsening trade war between the U.S. and China takes its toll on the global economy.

International Brent blend futures were at $67.48 as of 5:45 AM ET (0945 GMT), having fallen from over $69.20 overnight. U.S. Crude futures were down 0.4% at $58.41.

Figures released on Friday showed that financial market players had cut their bets on crude for a fourth week in a row.

The fall in prices led U.S. oil companies to cut the number of drilling rigs in use to their lowest level since March last year.

3. Fiat Chrysler proposes Renault (PA:RENA) merger

Fiat Chrysler Automobiles proposed a 50:50 merger of equals with French automaker Renault, a deal that would create the world’s third-biggest automotive group behind Toyota (T:7203) and Volkswagen (DE:VOWG_p).

The U.S.-Italian group’s offer includes a special dividend of 2.5 billion euros ($2.8 billion) to ‘equalize’ the value of the companies.

The move comes weeks after Renault’s long-standing strategic partner Nissan rejected fresh overtures for a full merger. Relations between Renault and Nissan have soured as a result of the fraud charges brought in Japan against Renault’s former CEO Carlos Ghosn.

Read more: StockBeat: The Spirit of Sergio Marchionne Lives on in FCA-Renault Merger Plan

4. China sounds the alarm over the yuan

Guo Shuqing China’s top banking regulator Guo Shuqing warned speculators against short-selling the yuan in a speech on Saturday, saying they would “inevitably suffer a huge loss.”

The yuan opened stronger against the dollar on Monday after the comments, but lost most of its gains after data showing that Chinese industrial profits posted their steepest drop in nearly three-and-a-half years in April. Profits fell by 3.7% year-on-year. The dollar closed at 6.8911 yuan in Asian trading.

Weakening profitability at China’s companies has been one of the main reasons why analysts fear that Beijing could be forced to let the yuan depreciate to absorb the shock of U.S. tariffs. Guo’s comments suggest Beijing is as worried as anyone else by that scenario.

5. Bitcoin rally

Prices for Bitcoin surged nearly 10% to their highest in over a year, although reasons for the move were as hard as ever to fathom.

The digital currency hit an intra-day high of $8,953.80, before retracing slightly.

The move occurred overnight during Asian trading, with most of it happening within a half-hour window.


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