Asian stocks stutter, euro gains after first round vote in France By Reuters
Written by Ankur Banerjee
SINGAPORE (Reuters) – Asian shares were subdued on Monday as traders weighed a look at U.S. rates, while the euro edged higher after a far-right party won a smaller-than-expected first-round vote in France’s shock election. .
The euro was up 0.32% at $1.0747, while European stock futures rose 1% as exit polls showed Marine Le Pen’s eurosceptic National Rally came out on top in the first round of France’s vote but by fewer votes than some analysts had predicted.
The shock vote unsettled markets as the far-right, and a left-wing coalition that came second on Sunday, promised a big boost at a time when France’s high budget deficit prompted the EU to recommend disciplinary measures.
“Maybe the outcome is not as bad as the market feared,” Michael Brown, chief strategist at Pepperstone.
“We’ve also seen a lot of talk that some parties are looking at maybe fielding candidates to try to avoid the seats that will be up for grabs at the National Rally next Sunday… The market may be taking a little comfort from that.”
The focus will now turn to next Sunday’s fixture and how the teams decide to line up in each of the country’s 577 places in the second round, leaving investors uncertain and confused.
“With this result, the markets are looking at another week of really high uncertainty. Maybe fear, as it is still possible that the RN will get an absolute majority next week,” said Carsten Brzeski, global head of macro at ING in Frankfurt.
In Asia, MSCI’s broad index of Asia-Pacific shares outside Japan was down 0.18%, to start the second half of the year as it rose 7% so far in 2024. increased by 0.57%.
Meanwhile, China’s manufacturing activity fell for a second month in June while services activity fell to a five-month low, an official survey showed on Sunday, keeping alive calls for more stimulus as the economy struggles to get back on its feet.
On the larger side, focus remains on when the Federal Reserve will start cutting rates after Friday’s data showed monthly US inflation was unchanged from May.
In the 12 months in May, the PCE price index increased by 2.6% after improving 2.7% in April. Last month’s inflation figures were in line with economists’ expectations. They remain above the Fed’s 2% inflation target.
Still, markets are still clinging to expectations of at least two more rate cuts from the Fed this year with a cut in September pegged at a 63% probability, the CME FedWatch tool showed.
US stocks ended lower on Friday after the early rally. [.N]
Among currencies, the yen traded around 160.98 per dollar after the government, in an unscheduled update of gross domestic product (GDP) data on Monday, said Japan’s economy shrank more than previously reported in the first quarter.
The data also showed that Japanese factory activity was unchanged in June amid weak demand and as companies struggled to cope with rising costs due to the weak yen.
The , which measures the US unit against six rivals, was last touched lower at 105.65.
