Its focus on making India a religious and Hindu nation didn’t bod well with the ethnic groups who are not Hindu, the growing inequality within the giant nation was also pointed as a reason for BJP’s fall from grace. Modi will most probably not quit his seat as PM, but the BJP will need coalition to pass reforms in the Parliament and that could prevent the party from passing its business-friendly policies and ambitious reforms concerning labour and land, and slow economic growth – which hit 8% this year. The Nifty 50 fell nearly 6% from a record and remains under pressure this morning while the Indian rupee depreciated as fast as it had jumped on Monday.

US jobs in focus

The JOLTS data from the US showed that job openings in the US fell to around 8 mio jobs in April. The softer-than-expected figure boosted appetite in US treasuries and increased the probability of seeing the first Federal Reserve (Fed) cut in September. The US 2-year yield – which tracks the Fed expectations – eased to 4.75%, and the probability of a September cut rose to around 65%. The US dollar index consolidated and equities eked out small gains. The S&P500 closed 0.15% higher. Nasdaq gained nearly 0.30% while Nvidia hit a fresh record as its efforts to diversify from other chipmakers and offer not only powerful AI chips but also a software and services continue to pay off.

Today, the ADP report is expected to print around 173K new private job additions to the US economy last month. That’s a soft but not a disastrous figure. If the ADP report comes in line with expectations or softer-than-expected, we may see the Fed doves gain more traction and the US yields ease more. Equities, on the other hand, will likely react positively to a figure that doesn’t look too soft, as a significant negative surprise on the jobs front could fuel recession worries and prevent equity investors from fully benefiting from potentially rising dovish Fed expectations.

US crude consolidates near critical support zone

The US crude consolidates losses near 4-month lows. The sharp fall in oil prices below critical support levels pushed the CTAs – commodity trading advisors -  to dramatically rise their short positions. CTAs tend to amplify the market moves as they tend to sell a bear market and buy a bull market. Therefore the latest selloff may be overdone and a correction could also see a support from CTAs, given that we are now approaching a critical support zone on the downside.

The rising dovish central bank voices are, in theory, supportive for oil prices in the context of reflation trade, but for the reflation trade to fully benefit to energy and commodities, growth expectations should not erode fast to flash recession. That’s a fine line. Price-wise, the $70/72pb range should act as a solid support zone.

Rate cuts on the menu

The next few hours could bring two rate cut announcements from two major central banks. The Bank of Canada (BoC) and the European Central Bank (ECB) are expected to announce a 25bp cut to their rates today and tomorrow respectively. A 25bp cut from the BoC could throw a floor under the recent pullback in Canadian stocks, while the ECB’s 25bp cut may not suffice to cheer up investors depending on what the Chief Christine Lagarde says at her press conference regarding the bank’s position concerning further cuts.

The EURUSD faces a decent resistance near 1.0930, a major Fibonacci resistance on its ytd decline. The ECB should sound sufficiently dovish to let the bulls clear the 1.0930 resistance this week – or the US data should be sufficiently ugly to break the back of the Fed hawks.