A look at the day ahead in U.S. and global markets from Mike

Dolan

June kicks off with a series of big election results around the

world - with big landslides unfolding for favoured candidates in

Mexico and India - while Wall Street has perked up in a key week

for the U.S. labour market.

The peso was slightly unnerved by the sheer scale of

Claudia Sheinbaum's win in Mexico's presidential election,

slipping to a five-week low ahead of Monday's open.

Mentored by popular outgoing leader Andres Manuel Lopez

Obrador, former mayor of Mexico City Sheinbaum took an historic

near 60% of the vote and the ruling coalition was on track for a

possible two-thirds super majority in both houses of Congress -

allow it to pass constitutional reforms without opposition.

On the other side of the world, Indian shares set

record highs, the rupee gained and bond yields dropped as

exit polls indicated a decisive mandate and a third term for

Prime Minister Narendra Modi. The polls showed Modi's Bharatiya

Janata Party set to increase its 303 seats in the 543-member

lower house and likely get a two-thirds majority - also enough

to initiate amendments to the constitution.

South Africa's rand firmed a touch on Monday, with

analysts expecting coalition negotiations to be the main driver

after the African National Congress failed to secure a majority

for the first time in 30 years last week - gaining as little as

40% of the vote in the final count. European Parliament

elections are also due at the end of the week.

Back on Wall St, the new month kicked off in a better mood

than the wobbly final week of May - in part thanks to a late

rally in U.S. stocks on Friday amid hopes

the economy and inflation were cooling enough to allow the

Federal Reserve ease later this year.

Perhaps partly related to month-end re-positioning, the

rally marked the biggest daily gain for the Dow Jones blue-chip

index this year and dragged the S&P500 into positive territory

too. S&P futures were higher again ahead of today's bell.

The release of the Fed's favoured PCE inflation gauge was

broadly as expected - even though economists argued over which

slice of the numbers to focus on.

The six-month annualised growth rate of core PCE, for

example, rose to 3.2% - its highest since July. But the Dallas

Fed's so-called "trimmed mean" PCE inflation cut eased to 2.7%

from 3.3% in March.

Take your pick.

But attention strayed more to details of the report showing

a weakening of consumer spending - which accounts for more than

two-thirds of U.S. economic activity - and also a cratering of

manufacturing business activity in May's Chicago PMI index far

below forecasts.

ISM's manufacturing survey readings for last month are due

out later on Monday - but the week will be dominated Friday's

May employment report and several labor market updates ahead of

that.

In the meantime, the Atlanta Fed's real-time "GDPNow"

estimate for U.S. growth this quarter slipped back almost a full

percentage point over the week to 2.66%.

The full picture has been enough to drag U.S. Treasury

yields back further from last week's peaks, even

though there's been a worrying re-emergence last week of the

so-called "term premium" on holding longer-term debt to its most

positive since November.

There was little disturbance in crude oil markets,

however, from the weekend decision by OPEC+ to extend most of

its deep oil output cuts well into 2025 as the group seeks to

shore up the market amid tepid demand growth and rising rival

U.S. production.

The dollar was higher to start the week - in part as

the euro brace's for Thursday's long-telegraphed European

Central Bank interest rate cut.

The gap between French and German 10-year government bond

yields narrowed slightly even after Standard & Poor's cut its

rating on France's sovereign debt late Friday - a move market

participants said had been widely expected.

The downgrade reflects S&P's projection that, contrary to

its previous expectations, France's general government debt as a

share of GDP will increase as a result of larger-than-expected

budget deficits over 2023-2027.

European and Asia shares were mostly higher, with China's

mainland index a notable underperformer yet again.

Online fashion firm Shein is preparing to file a prospectus

with Britain's Financial Conduct Authority for approval ahead of

a potential London float which could value the Chinese-founded

firm around 50 billion pounds ($63.70 billion), Sky News

reported on Sunday.

The confidential filing could take place as soon as the

coming week, the report added, citing sources. The fast-fashion

company stepped up preparations for its London listing after its

attempt to float itself in New York faced regulatory hurdles and

pushback from U.S. lawmakers.

Key diary items that may provide direction to U.S. markets later

on Monday:

* US May manufacturing surveys from ISM and S&P Global, April

construction spending

* US Treasury auctions 3-, 6-month bills

(By Mike Dolan, editing by David Evans

[email protected])