Philadelphia, PA–U.S. stocks opened lower on Monday, weighed down by a drop in Apple shares and politics.
Apple fell 1.26% in premarket trading. Lukewarm market response since the launch of iPhone 8 led to the worst weekly loss for the stock in over a year.
Politics dominated global markets today. Angela Merkel won her fourth term as German chancellor in the country’s election but with a reduced share of the vote as a far-right party made major gains. The euro retreated and European markets were largely flat in early trading. Overnight Asian peers declined.
“Investors were expecting a victory for Angela Merkel, but there has been a surprise in the relatively poor performance of the CDU and SPD, who suffered their worst results since 1949,” Nick Peters, multi asset portfolio manager at Fidelity International, said in a note. “While this leaves the political situation more uncertain than before, the likelihood of a Jamaica coalition of the CDU, Greens and FDP remains high. “
He noted, the political implications of the elections remain relatively mute, as the eurozone continues to enjoy a strong and synchronised recovery.”
British Prime Minister Theresa May said on Friday that Britain would seek a transitional arrangement of about two years, effectively delaying the impact of Brexit until 2021.
But the EU wants to see much more detail concerning the rights of millions of European migrants, and exactly how much Britain is prepared to pay in a divorce bill, before it will move on to discuss future trading arrangements, according to a CNN report.
On macroeconomics, Fed’s rate hike is on track but will be gradual as domestic inflation is picking up and the U.S. economy’s fundamentals are sound, New York Federal Reserve President William Dudley said.
Investors are expecting more clues in Fed Chief Janet Yellen’s speech later in the week for more guidance on the monetary policy.
“Investors would like to get more clarity as far as what the Fed is going to do as they move forward with the unwinding of the balance sheet and how they are going to move forward next year,” Robert Pavlik, chief market strategist at Boston Private Wealth in New York told the Reuters.
The Fed kept interest rates unchanged in its September policy meeting, but signaled it still expects one more increase by the end of the year.
Separately, the renegotiation of NAFTA, the trade deal between the U.S., Canada and Mexico, began on Saturday through Wednesday. Little progress has been made so far on key issues.
More data coming this week:
Monday: Fourth round of Brexit negotiations begin
Tuesday: Earnings from Nike (NKE)
Wednesday: U.S. Energy Information Administration releases weekly crude inventories report
Thursday: Report released on U.S. gross domestic product for the second quarter
Friday: Brazil unemployment data released
