Political Elections Are Already Rocking Global Stock Markets

In what may be a prelude to come for US markets this November, political elections around the world have rocked global markets in the past few weeks. We already have seen what happened in India, Mexico, and South Africa, two weeks ago. Last week it was France, whose stock market dumped, on parliamentary elections that forced its Prime Minister to call for snap elections.

French bonds dropped in value. The worry bond investors have is that the “far-right” that is growing in France is likely to increase spending, thereby increasing French government debt, which is already at 111% of GDP.

The Euro dropped with this news, the US dollar index went up last week, while gold held firm. Meanwhile, the US stock market rally is narrowing and obvious divergences between a few stocks in the market going up, such as NVDA, and entire indices, such as the Russell 2000, now trading below it’s 50-day moving average are happening. I’ll be watching to see what one indicator does this week to gauge how much longer the rally will be able to go.