This Week: UK100 may offer relative stability amid UK elections

• UK100 index includes global companies, less domestic exposure
   
• UK100 index also has inverse relationship with GBP
   
• Other key events this week: Eurozone CPI, US NFP data
   
• Fed policy and US job data also influence UK100 movements
   
• UK100 forecasted to climb past 9,300 in 12 months

With markets still digesting the weekend’s French election results, global investors and traders are also mindful of the UK elections just days away.

Amid the political uncertainties, traders with smaller risk appetites may be on the hunt for less-volatile assets. Enter the UK100 stock index.
 

To be clear, the UK100 is not immune from broader risk sentiment, and may well fall in tandem with broader markets.

Though the UK100 is forecasted to still climb past 9,300 in the next 12 months, it must first overcome any wobbles from the upcoming elections, as well as other key events this week.
 

Events Watchlist:
 

• Tuesday, July 2: Eurozone June consumer price index (CPI)

Economists predict that inflation in the Eurozone, as measured by the CPI, ticked down lower year-on-year, compared to May’s figures, though the month-on-month print edged higher to 0.3%.

Higher-than-expected CPI data may add to the downward pressures on European markets and weigh on the UK100 as well.

These CPI releases over the past year have moved the UK100 as much as 0.16% up or 0.2% down.

• Thursday, July 4th: UK elections

The UK100 may offer a less-volatile response to this week’s polls, given that this stock index includes global names like AstraZeneca, Shell, HSBC, Unilever, and BP, which derive over 80% of revenues from outside the UK.

This means the UK100 is less exposed to the domestic economy, evidenced by its Q2 gains over 3% versus the declines for EU50, GER40, and FRA40 indices.

Also note that the UK100 tends to move in the opposite direction as GBPUSD, further buffering this stock index’s potential role as a hedge this week.

• Friday, July 5th: US June nonfarm payrolls (NFP)

Beyond European political events, the Fed’s policy outlook also still holds considerable influence over European stock markets. The Fed may be allowed to proceed with its intended rate cuts later this year, if the US jobs market continues to soften in June, as per economists’ forecasts (Headline NFP: 190,000; unemployment: 4%).

These NFP releases over the past year have moved the UK100 as much as 0.25% up or 0.34% down.

Here’s a comprehensive list of other key economic data and events due this week:
 

Monday, July 1

• FRA40 index: Markets react to Sunday’s French election
   
• JPY: Japan 2Q Tankan survey
   
• CNH: China June manufacturing PMI
   
• AU200 index: June Melbourne Institute Inflation
   
• GER40 index: Germany June CPI
   
• US30 index: US June ISM manufacturing PMI
   

Tuesday, July 2

• AUD: RBA meeting minutes
   
• EUR: Eurozone June CPI; May unemployment rate
   
• USD index: JOLTs job openings; Speeches by Fed Chair Jerome Powell and ECB President Christine
  Lagarde
   

Wednesday, July 3

• CN50 index: China June services and composite PMIs
   
• EU50 index: Eurozone May PPI
   
• US500 index: US weekly initial jobless claims, FOMC meeting minutes, speech by New York Fed President
  John Williams
   

Thursday, July 4

• AUD: Australia May trade balance
   
• GER40 index: Germany May factory orders; ECB meeting minutes
   
• GBP: UK elections
   
• US markets closed
   

Friday, July 5

• SG20 index: Singapore May retail sales
   
• TWN index: Taiwan June CPI
   
• EU50 index: Eurozone May retail sales; Germany May industrial production
   
• CAD: Canada June unemployment
   
• US500 index: US June nonfarm payrolls; speech by New York Fed President John Williams