May was a manic month for markets but brace yourself for June.
The fate of a historic summit between North Korea and the United States is unclear but there are other events on the radar to potentially convulse world markets — from Turkish elections to a Swiss referendum on so-called sovereign money.
Here are six events, listed chronologically, that investors will be watching in June:
1. POSSIBLE SWISS SHOCK - JUNE 10
Switzerland holds a referendum on June 10 on whether to introduce a sovereign money system that would shake up how its banks operate. The measure, if passed, would bar commercial banks from creating money every time they make a loan.
Supporters want the Swiss National Bank to be the only authority producing new money in the country. But the SNB argues the plan will damage its ability to conduct monetary policy.
If the referendum passes, investors could lose faith in the Swiss franc CHF=EBS since money-printing will not be backed by assets. It could also hurt the profits of Swiss banks such as UBS (UBSG.S) and Credit Suisse (CSGN.S).
Opinion polls show just 35 percent support for the change, but as Brexit and the 2016 U.S. election showed, electoral upsets can happen.
2. FED UP - JUNE 12-13
On June 12-13, the U.S. Federal Reserve should deliver what will be the second of three interest rate hikes expected for this year. Rates should rise to 1.75-2.0 percent.
The question now is whether the Fed might squeeze in a fourth rate rise in 2018. That likelihood lifted the dollar in May to its best month since November 2016.
3. TRUMP AND KIM - TO MEET OR NOT TO MEET
The fate of a historic U.S.-North Korea summit scheduled for June 12 is unclear. But U.S. President Donald Trump said this week he hopes the meeting - and a push for Pyongyang’s denaturalization — will happen.
4. OPEC OIL TO FLOW AFTER JUNE 22?
With Brent crude recently soaring to $80 per barrel, a June 22 oil producers’ meeting in Vienna will be monitored by global policymakers and market players.
Since early 2017, members of the Organization of Petroleum Exporting Countries, Russia and some other non-OPEC producers have curbed oil output. The pact runs until the end of 2018 and the Vienna meeting will discuss whether to extend it.
5. TURKEY’S VOTE ON JUNE 24
Turkey, once counted among the most promising emerging markets, has suffered a massive currency and bond sell-off this year. It holds an election on June 24, with Tayyip Erdogan expected to be re-elected to a newly empowered executive presidency.
6. BREXIT BREAK?
With time running out for Britain to secure a deal before exiting the European Union next March, diplomats are hoping an EU summit on June 28-29 could break the deadlock.
British Prime Minister Theresa May remains stuck between a rock and a hard place, with Brexit supporters pushing to sever EU ties and others advocating keeping customs cooperation with the bloc. A government white paper due before the talks will outline plans for various sectors, including financial services and agriculture.
Uncertainty over Britain's future EU ties continue to weigh on the economy and the pound, which is on course for a sixth weekly loss out of the last seven GBP=.
Reference: Reuters
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