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Euro Drops, Stocks to Fall After Macron’s Setback: Markets Wrap

In Business
June 10, 2024

(Bloomberg) — The euro fell to its lowest in a month after French President Emmanuel Macron called a snap vote in the wake of European Parliament elections. Asian currencies declined on the heels of a strong US jobs report from Friday.

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The common currency dropped as much as 0.5%, retreating alongside the futures for European equities and French bonds. Gains for a far-right party in the vote — which were in line with expectations — led Macron to call a snap legislative ballot for his country in a bid to stop the rise of his far-right rival Marine Le Pen.

German Chancellor Olaf Scholz’s Social Democrats suffered a record rout, while Prime Minister Giorgia Meloni’s right-wing party appeared to be the winner in Italy.

“Parties to the right are the big winners in the election and Italian Prime Minister Meloni’s position when negotiating with other European leaders is strengthened,” said Pia Fromlet, euro-area economist at Skandinaviska Enskilda Banken AB.

Apart from European politics, it was a rethink on Federal Reserve interest-rate cuts and eased concern about an economic slowdown following Friday’s solid US jobs report that shaped trading on Monday.

The yield on 10-year Treasuries advanced for a third day, while the South Korean won and the Malaysian ringgit slid. MSCI’s Asia-Pacific stock index was slightly lower.

Japan’s Topix rose, with insurance firms leading the advance on expectations of higher fixed-income yields boosting profitability. Markets in China, Hong Kong, Taiwan and Australia were closed for holidays.

The latest US jobs figures highlight a labor market that continues to defy expectations and blunt the impact on the economy from high interest rates and prices.

“We’re still expecting a soft landing in the States — as long as that’s a scenario, I think Asian markets have upside potential,” Lorraine Tan, director of Asia equity research at Morningstar Inc., said on Bloomberg Television on Monday.

Investors may glean more on the Fed’s resolve to ease monetary policy when US policymakers update their forecasts for interest rates on Wednesday. The Bank of Japan’s next announcement is scheduled for Friday, and economists expect it to keep policy steady.

Oil edged higher after a weekly drop with the market still digesting OPEC+’s decision to restore supply, as traders look ahead to a set of industry reports and a Federal Reserve decision on interest rates.

Also in the Middle East, Benny Gantz resigned from Israel’s emergency government and called for elections, criticizing Prime Minister Benjamin Netanyahu over his handling of the war against Hamas. His exit deprives the government of a moderate voice, leaving Netanyahu more reliant on his right-wing coalition partners.

Some key events this week:

  • Pakistan rate decision, Monday

  • UK jobless claims, unemployment, Tuesday

  • China CPI, PPI Wednesday

  • Thailand rate decision, Wednesday

  • India CPI, industrial production, Wednesday

  • UK monthly GDP, Wednesday

  • US mortgage applications, CPI, Wednesday

  • FOMC decision, quarterly summary of economic projections, Fed Chair Jerome Powell’s press conference, Wednesday

  • Australia unemployment, Thursday

  • Eurozone industrial production, Thursday

  • US jobless claims, PPI, Thursday

  • New York Fed’s John Williams moderates discussion with US Treasury Secretary Janet Yellen, Thursday

  • Tesla annual meeting, Thursday

  • Japan rate decision, Friday

  • U. of Michigan consumer sentiment, Friday

  • Chicago Fed’s Austan Goolsbee, Fed Governor Lisa Cook, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 5:33 a.m. London time

  • Nasdaq 100 futures were little changed

  • Futures on the Dow Jones Industrial Average were little changed

  • The MSCI Asia Pacific Index was little changed

  • The MSCI Emerging Markets Index fell 0.4%

  • Nikkei 225 futures (OSE) rose 0.6%

  • Japan’s Topix rose 0.7%

  • Euro Stoxx 50 futures fell 0.4%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro fell 0.4% to $1.0753

  • The Japanese yen fell 0.2% to 157.05 per dollar

  • The offshore yuan fell 0.1% to 7.2719 per dollar

  • The British pound was little changed at $1.2716

Cryptocurrencies

  • Bitcoin was little changed at $69,650.1

  • Ether fell 0.3% to $3,687.59

Bonds

  • The yield on 10-year Treasuries advanced one basis point to 4.45%

  • Germany’s 10-year yield advanced seven basis points to 2.62%

  • Britain’s 10-year yield advanced nine basis points to 4.26%

  • Australia’s 10-year yield was little changed at 4.22%

Commodities

  • Spot gold was little changed

  • West Texas Intermediate crude rose 0.3% to $75.78 a barrel

  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Stephen Kirkland.

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