Asian stocks rise, euro falls slightly after French election: Markets Wrap

(Bloomberg) — Asian shares rose as a rally in Taiwan Semiconductor Manufacturing Co. lifted the region’s benchmark stock index. The euro fell slightly on worries about France’s finances after the election.

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The MSCI Asia Pacific Index of stocks rose as much as 0.4%, with heavyweight TSMC climbing to a record after Morgan Stanley raised its price target for the company. US payrolls data on Friday added to the boost, bolstering the case for the Federal Reserve to move towards rate cuts.

Losses in the euro were tempered by news that no French political party won the majority needed to govern in Sunday’s second round of voting. The outcome could limit the influence of the left-wing New Popular Front coalition and Marine Le Pen’s Rassemblement National, both of which advocate higher government spending.

Bitcoin fell along with other cryptocurrencies on concerns about potential sales of the token by creditors of the bankrupt Mt. Gox exchange. In China, the central bank attempted to take greater control of market interest rates by announcing additional open market operations and narrowing the range within which short-term interest rates can fluctuate.

Boeing Co. has pleaded guilty to criminal conspiracy to defraud the United States after the Justice Department found the planemaker failed to honor an earlier settlement over two crashes of its 737 Max jetliner.

France was a key focus for investors on Monday morning. The New Popular Front, which includes the Socialists and the far-left France Unbowed, won 178 seats in the National Assembly, according to data compiled by the Interior Ministry. National Rally, which polls had expected to win the election last week, came in third with 143, while President Emmanuel Macron’s centrist alliance won 156 seats.

French government bond futures underperformed their German counterparts. But the spread between the two is starting to narrow, signaling that tensions are easing.

“We view the outcome as broadly favorable for the market, with risks associated with the National Rally fading for now and the left/far-left NFP remaining far from a majority, with essentially no prospect of executing the agreed alliance agenda,” Krishna Guha, a strategist at Evercore ISI, wrote in a note to clients.

The rest of the week will likely be dominated by events in the US.

Federal Reserve Chairman Jerome Powell’s testimony before Congress and U.S. inflation numbers are among the key events this week. Traders will be looking to the two to reinforce bets that policy easing could begin as early as September amid signs that the U.S. economy is weakening based on the latest jobs report.

The prospect of a Fed rate cut in the coming months got a boost on Friday after nonfarm employment data showed U.S. employment and wage growth fell in June, while the unemployment rate rose to its highest level since late 2021.

Earnings figures from major US banks, including JPMorgan Chase & Co., will also be announced, as will interest rate decisions in New Zealand and South Korea.

President Joe Biden is facing a new round of threats from members of his own party as he tries to salvage his embattled re-election bid and fend off calls from Democratic lawmakers to step aside. Biden posted his best performance yet in a Bloomberg News/Morning Consult poll of swing states, even as voters gave his debate performance scathing ratings.

In commodities, both gold and oil stabilized. In the case of the latter, traders were watching dual threats to production, namely a storm in the US and wildfires in Canada.

Important events this week include:

  • Indian Prime Minister Narendra Modi visits Moscow, Monday

  • Fed Chairman Jerome Powell delivers semi-annual testimony to the Senate Banking Committee Tuesday

  • U.S. Treasury Secretary Janet Yellen testifies before the House Financial Services Committee on Tuesday

  • Fed Vice Chairman for Supervision Michael Barr and Governor Michelle Bowman speak Tuesday

  • Chinese PPI, CPI, Wednesday

  • Japan PPI, Wednesday

  • Fed Chairman Jerome Powell to testify before the House Financial Services Committee on Wednesday

  • Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman to speak Wednesday

  • BOE Chief Economist Huw Pill and BOE Policymaker Catherine Mann to speak on Wednesday

  • US CPI, Initial Jobless Claims, Thursday

  • Atlanta Fed President Raphael Bostic and St. Louis Fed President Alberto Musalem speak

  • Japan Industrial Production, Friday

  • Trade with China, Friday

  • Consumer confidence from the American University of Michigan, PPI, Friday

  • Citigroup, JPMorgan, Wells Fargo and Bank of New York Mellon Report Quarterly Results Friday

Some of the major moves in the markets:

Shares

  • S&P 500 futures were down 0.1% at 1:15 p.m. Tokyo time

  • Nikkei 225 futures (OSE) rose 0.6%

  • Japan’s Topix fell 0.1%

  • Australia’s S&P/ASX 200 fell 0.6%

  • Hong Kong’s Hang Seng fell 1.3%

  • The Shanghai Composite fell 0.5%

  • Euro Stoxx 50 futures rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro remained virtually unchanged at $1.0831

  • The Japanese yen rose 0.1% to 160.55 per dollar

  • The offshore yuan was unchanged at 7.2889 per dollar

Cryptocurrency

  • Bitcoin fell 3.6% to $55,226.86

  • Ether fell 3.7% to $2,888.55

Bonds

Raw materials

  • West Texas Intermediate crude oil fell 0.3% to $82.94 a barrel

  • Spot gold fell 0.3% to $2,383.98 an ounce

This story was produced with the help of Bloomberg Automation.

This story was produced with the help of Bloomberg Automation.

–With assistance from Michael G. Wilson, Matthew Burgess, and Ivy Chok.

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