Euro rises after French vote, Chinese stocks fall: Market overview

(Bloomberg) — The euro rose on European stock index futures on speculation that Marine Le Pen’s far-right party will struggle to win an outright majority in the French elections, raising concerns about further pressure on France’s public finances. the country is declining.

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French government bond futures rose while German bunds fell after the first round of voting showed Le Pen’s National Rally ahead of President Emmanuel Macron’s centrist alliance, albeit less comfortably than some polls had predicted. A very strong performance for her party would have increased the chances of an expansionary fiscal policy in France, where the budget deficit is already larger than what is allowed under European Union rules.

Most Asian stocks rose, while the Japanese and South Korean benchmarks both rose. Chinese shares fell after a report showed factory activity shrank for a second month in June. While data showed the Caixin manufacturing gauge rose slightly last month, Bloomberg Economics said the marginal improvement did little to counter the worrying message from official surveys.

“We are starting in Asia with a sense of relief that the far-right parties have not gained the kind of majority that was feared,” Charu Chanana, market strategist for Saxo Capital Markets in Singapore, told Bloomberg Television’s David Ingles and Stephen. English.

In addition to political horse-trading in France, investors will also look to the European Central Bank for clues, she said. She added that “there is a sense of stability for the eurozone economy after that first rate cut, but it certainly doesn’t look like we’re there yet.”

Confidence among major Japanese manufacturers rose, data showed on Monday, leaving the door open for the central bank to consider a rate hike later this month. The yield on the country’s 10-year bond rose 2.5 basis points.

One in three economists surveyed by Bloomberg predict a rate hike at the next meeting. The yen fell to its lowest level since 1986 last week, prompting some analysts to signal an increased risk of a rate hike as Governor Kazuo Ueda has vowed to keep a close eye on the yen’s impact on inflation.

Economy Cooling

As the quarter ended Friday in the U.S., a raft of data showed the world’s largest economy is cooling without lasting harm to consumers. U.S. consumer confidence fell less than initially estimated on expectations that inflationary pressures will ease and the Fed’s preferred inflation gauge marked the smallest increase in six months. US government bonds fell lower on Monday.

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“There’s a lot of election uncertainty in the second half and we think the dollar will be the best risk-off hedge,” Alex Loo, currency and macro strategist at TD Securities, told Annabelle Droulers and Shery Ahn on Bloomberg Television. “We find it attractive as a safe haven currency.”

On the commodity front, oil prices were little changed as traders assessed China’s economic prospects and geopolitical risks in Europe and the Middle East.

Important events this week:

• Retail sales in Australia, Monday

• Japan Tankan Report, Monday

• China Caixin Manufacturing PMI, Monday

• Eurozone S&P Global Eurozone Manufacturing PMI, Monday

• Indonesia CPI, Monday

• India HSBC Manufacturing PMI, Monday

• UK S&P Global/CIPS UK Manufacturing PMI, Monday

• US Construction Spending, ISM Manufacturing, Monday

• ECB President Christine Lagarde speaks on Monday

• President of the Bundesbank Joachim Nagel speaks on Monday

• RBA publishes minutes of June policy meeting, Tuesday

• South Korean CPI, Tuesday

• CPI eurozone, unemployment, Tuesday

• Fed Chairman Jerome Powell to speak Tuesday

• ECB President Christine Lagarde speaks on Tuesday

• China Caixin serves PMI, Wednesday

• Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday

• Tariff decision Poland, Wednesday

• US FOMC minutes, ISM services, factory orders, trade, initial unemployment claims, durable goods, Wednesday

• ECB President Christine Lagarde to speak on Wednesday

• New York Fed President John Williams speaks Wednesday

• Swedish Riksbank publishes minutes of June meeting, Wednesday

• Australia trading, Thursday

• Brazil trading, Thursday

• UK General Election, Thursday

• European Union’s preliminary tariffs on Chinese electric vehicles to be implemented on Thursday

• ECB publishes report of June policy meeting, Thursday

• American Independence Day, Thursday

• Philippines CPI, Friday

• Taiwan CPI, Friday

• Thailand CPI, International Reserves, Friday

• Eurozone retail sales, Friday

• French trade, industrial production, Friday

• Germany industrial production, Friday

• ECB President Christine Lagarde speaks on Friday

• Unemployment Canada, Friday

• US Unemployment, Nonfarm Payrolls, Friday

• New York Fed President John Williams will speak on Friday

Some of the major moves in the markets:

Shares

• S&P 500 futures rose 0.3% as of 11:28 a.m. Tokyo time

• Hang Seng futures fell 0.4%

• Nikkei 225 futures (OSE) rose 0.3%

• Japan’s Topix rose 0.5%

• Australia’s S&P/ASX 200 fell 0.4%

• The Shanghai Composite fell 0.1%

• Euro Stoxx 50 futures rose 1%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.3% to $1.0750

• The Japanese yen was virtually unchanged at 160.87 per dollar

• The offshore yuan was little changed at 7.2986 per dollar

Cryptocurrencies

• Bitcoin rose 2.5% to $63,475.32

• Ether rose 2.4% to $3,498.07

Bonds

Raw materials

This story was produced with help from Bloomberg Automation.

–With assistance from Matthew Burgess.

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