HONG KONG – The euro slipped yesterday, but eurozone stock markets edged up after early losses following snap French elections in which a hung parliament appeared the likeliest outcome. In France, the left was set to emerge as the biggest group in a new parliament, beating out a resurgent far-right in a vote called by president Emmanuel Macron three years ahead of schedule.
Macron’s centrist alliance will have fewer seats in parliament, but held up better than expected.
The outcome, in which no bloc is expected to have an outright majority, has left the country in a “thick fog” of uncertainty, according to one pollster, with the euro dropping around 0.4% from Friday’s levels before clawing back some of its losses.
“The best that can be said is that neither the (left-wing) NFP nor (far-right) National Rally will be able to implement their respective electoral manifestos in full, which would most worry investors fretful about France’s fiscal situation,” Alvin Tan of RBC capital markets said.
While “the worst outcome for the euro has been averted for now”, Tan added, uncertainty remains, “and the fiscal balance is unlikely to improve significantly as a result”.
Paris’s CAC 40 benchmark stocks index sank at the open yesterday, but recovered to post modest gains in morning trade, as did Frankfurt’s DAX. The FTSE 100 index in London was more or less flat.
Asian markets were mostly down, with Hong Kong’s Hang Seng Index dropping nearly 2% by yesterday afternoon.
Tokyo’s Nikkei index seesawed in and out of the red throughout the day before finally ending slightly down, while the broader Topix shed more than 1% after hitting a new high last week.
Taipei was a rare bright spot, posting solid gains on the back of a surge in shares of chipmaking giant TSMC, which added nearly 3% over the course of the day.
On Wall Street, the Nasdaq and S&P 500 hit fresh highs on Friday, and the Dow Jones Industrial Average also ticked upwards after official data showed the US labour market cooling, raising expectations of a September interest rate cut.
Investors will be looking for more clues in an appearance by Federal Reserve boss Jerome Powell before the US Senate banking committee today, as well as fresh consumer price index data due later in the week. – Nampa/AFP