(Bloomberg) — Asian stocks are expected to fall in early trading as concerns over a political crisis in France stoke anxiety in global markets, while a flurry of central bank decisions this week could signal delays in the long-awaited easing cycle.
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Stock futures in Australia, Japan and Hong Kong point to opening losses after the S&P 500 fell slightly on Friday, 10-year Treasuries rose and gold rallied. American contracts changed little at the start of the session.
The flight to safe-haven assets came as risk sentiment deteriorated, with the global stock index falling the most in two weeks as the fallout from France’s snap parliamentary elections threatened to spill over into the economy. ‘European Union. The greenback hit its highest level since November and the euro posted its biggest fall in two months last week, while the spread between French and German bonds widened the widest on record.
Traders “are being guided on risk perception through the aggressive widening of the yield premium observed on the 10-year French bond yield relative to the 10-year German Bund,” wrote Chris Weston, head of research at Pepperstone Group in Melbourne, in a note to clients. “The ever-changing theme in French politics continues to see market participants attempt to assess the risk and uncertainty around France’s future fiscal situation. »
A coalition of French left-wing parties presented a manifesto to break apart most of Macron’s seven years of economic reforms and put the country on a collision course with the EU over fiscal policy. Traders will closely watch European bond futures as they open in Asia after far-right leader Marine Le Pen said she would not try to oust President Emmanuel Macron if she wins the election anticipated legislative elections in France, in an appeal to moderates and investors.
Days after the Federal Reserve downgraded its forecast for monetary easing in the United States this year, policymakers from the United Kingdom to Australia are expected to signal this week that they are still not sufficiently convinced of disinflation to start reducing borrowing costs themselves. Policymakers in emerging markets, notably in Indonesia and Brazil, are also expected to push back on rate cut expectations.
The People’s Bank of China is expected to inject additional liquidity when it renews its medium-term lending facility on Monday, but most economists expect it to leave the funds rate unchanged at 2.5%. The move comes ahead of key data such as industrial production, retail sales, house prices and property investment, as policymakers implement measures to support the property market.
“The housing market has not yet bottomed out, but government policy is definitely moving toward easing more decisively,” Min Dai, head of Asia macro strategy at Morgan Stanley, wrote in a note. addressed to its customers. “Whether it will work remains to be seen. »
U.S. stocks struggled to gain ground Friday after a gauge of consumer confidence fell to a seven-month low as high prices continued to weigh on personal finances. The S&P 500 closed slightly lower, led by declines in industrial stocks. Technology outperformed, with Adobe Inc. up 15% on strong prospects. The Stoxx Europe 600 slipped 1%, while the French CAC 40 index extended its losses to more than 6% last week, its highest level since March 2022.
Australian bonds were flat in early trading on Monday after 10-year Treasury yields fell slightly on Friday. Minneapolis Federal Reserve Bank President Neel Kashkari said over the weekend that the central bank can take its time and monitor incoming data before starting to cut interest rates, echoing the sentiment of the Cleveland Fed President Loretta Mester, who still sees inflation risks as tilted to the upside.
In the commodities sector, oil held above $78 a barrel while gold edged lower after Friday’s rise amid safe-haven demand.
This week, traders will also be watching inflation figures from Europe and the UK to be able to make accurate bets on the outlook for global monetary policy. Meanwhile, a number of Federal Reserve officials, including Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee, and Fed Governor Adriana Kugler, are expected to take over. word.
Some of the main market movements:
Actions
S&P 500 futures were little changed as of 8:17 a.m. Tokyo time.
Hang Seng futures fell 0.7%
S&P/ASX 200 futures fell 0.2%
Nikkei 225 futures fell 1%
Currencies
Bloomberg Dollar Spot Index little changed
The euro was little changed at $1.0704
The Japanese yen fell 0.1% to 157.56 per dollar
The offshore yuan was little changed at 7.2716 per dollar.
The Australian dollar was little changed at $0.6616.
Cryptocurrencies
Bitcoin rose 0.3% to $66,659.99
Ether rose 0.8% to $3,628.7
Obligations
Raw materials
West Texas Intermediate crude fell 0.1% to $78.37 a barrel
Spot gold fell 0.2% to $2,328.53 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from Michael G. Wilson.
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