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Fallout From European Election Hits Euro, Stocks: Markets Wrap

In Business
June 10, 2024

(Bloomberg) — The euro fell to its lowest in a month after French President Emmanuel Macron called a legislative vote in the wake of suffering a crushing defeat in the European Parliament elections.

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The common currency dropped 0.4%, retreating alongside European equities and French bonds. BNP Paribas SA and Societe Generale SA tumbled more than 6% as banks led losses among stocks in Paris.

Gains for the French far-right in the vote for European lawmakers prompted Macron to gamble on a snap election to halt the rise of his rival, Marine Le Pen. While German Chancellor Olaf Scholz also suffered humiliating losses, centrists parties across the bloc mostly held their ground.

For the currency, the risk from Sunday’s results is that the European “far-right swing becomes embedded in higher positions of power,” said Simon Harvey, head of FX analysis at Monex Europe. The weakness “is likely to remain durable as long as the national polls support a consolidation in Le Pen’s support.”

The euro entered the weak already on the back foot after suffering its biggest loss in almost two months on Friday as stronger-than-expected US jobs figures lifted the dollar. Focus will now turn toward Federal Reserve policymakers updating their rates forecast on Wednesday after last week’s data tempered optimism about the extent of policy easing this year.

“A hawkish Fed outcome this Wednesday could prove harder to shake off” for the euro than the European elections, Ipek Ozkardeskaya, an analyst at Swissquote Bank, said in a note on Monday.

Meanwhile, the dollar strengthened against a basket of currencies while US equity futures contracts edged lower. Southwest Airlines Co. rose as much as 5.5% in premarket trading after the Wall Street Journal reported that Elliott Investment Management has built a an almost $2 billion stake in the US carrier.

The yield on 10-year Treasuries advanced for a third day.

MSCI’s Asia-Pacific stock index was little changed, while traders were also focused on India as Prime Minister Narendra Modi is set to outline portfolios for his cabinet later Monday.

Some key events this week:

  • 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

  • The Stoxx Europe 600 fell 0.7% as of 10:17 a.m. London time

  • S&P 500 futures fell 0.2%

  • Nasdaq 100 futures fell 0.2%

  • Futures on the Dow Jones Industrial Average fell 0.3%

  • The MSCI Asia Pacific Index was little changed

  • The MSCI Emerging Markets Index fell 0.4%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.2%

  • The euro fell 0.4% to $1.0758

  • The Japanese yen was little changed at 156.80 per dollar

  • The offshore yuan was little changed at 7.2654 per dollar

  • The British pound was little changed at $1.2709

Cryptocurrencies

  • Bitcoin fell 0.4% to $69,384.41

  • Ether fell 0.8% to $3,671.26

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.45%

  • Germany’s 10-year yield advanced three basis points to 2.65%

  • Britain’s 10-year yield advanced four basis points to 4.30%

Commodities

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Subrat Patnaik.

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