Stock market today: Asian and French shares fall after elections fail to leave a clear majority

HONG KONG– Asian stocks fell on Monday and French stocks fell after Sunday’s elections left the National Assembly without a majority for any political group and a left-wing alliance won the most seats.

The CAC-40 index of large companies fell 0.4% shortly after opening Monday at 7,643.03.

The markets’ biggest fear, analysts say, was a majority for both the left-wing New National Front and the anti-immigrant National Rally led by Marine Le Pen. Both parties made spending promises that raised fears that France’s already large deficit would widen. This has already led to a widespread sell-off of French government bonds.

Although that outcome was avoided, France now faces weeks of uncertainty as there is no clear majority for any of the main political forces in parliament to support a new government after Prime Minister Gabriel Attal said he would resign. if. This increases the likelihood that any new government will have difficulty passing legislation and making difficult spending choices in order to prevent the country’s debt and deficit from spiraling out of control.

“The fact that the left has become the strongest group in parliament raises serious concerns,” said Holger Schmieding, chief economist at Berenberg Bank. “France is heading towards a period of political uncertainty and – most likely – fiscal problems and some reversal of President Emmanuel Macron’s pro-growth reforms. ”

The euro fell to $1.0819 from $1.0836 on Monday.

US stocks rose to more records on Friday, driven by a highly anticipated report in the business market. US futures and oil prices fell.

In Tokyo, the Nikkei 225 index fell 0.3% to 40,780.70, despite official data showing real wages fell 1.4% year on year in May, a decline for the 26th consecutive month, as the weakening yen and higher raw material costs have increased the cost of imports. . While nominal wages rose 1.9%.

Hong Kong’s Hang Seng index fell 1.8% to 17,484.93 and the Shanghai Composite index fell 0.7% to 2,928.08.

S of Australia&OP/ASX 200 fell 0.8% to 7,763.20, while South Korea’s Kospi fell 0.1% to 2,859.20.

On Friday, S.&P500 rose 0.5% to 5,567.19, setting an all-time high for the third consecutive day following Thursday’s pause in trading for the July 4 holiday. The index has already broken 34 records and is up close to 17% this year, which is just a little more than half.

The Dow Jones Industrial Average rose 0.2% to 39,375.87, while the Nasdaq Composite rose 0.9% to 18,352.76.

The action was most decisive in the bond market, where Treasury yields fell following the US jobs report. Employers hired more workers last month than economists expected, but the number was still a slowdown from May’s hiring. Additionally, the unemployment rate rose unexpectedly, worker wage growth slowed and the US government said hiring in previous months was lower than previously indicated.

Taken as a whole, the data reinforced the belief on Wall Street that growth in the US economy is slowing under the weight of high interest rates. This is precisely what investors want to see, because a slowdown keep control over inflation and could push the Federal Reserve will begin cutting its key interest rate at its highest level in two decades.

The jobs report’s clearest takeaway for financial markets was that it keeps the Fed on track to cut its key interest rate later this year, probably in September and perhaps again in December. The two-year Treasury yield, which closely tracks expectations for Fed action, fell to 4.60% from 4.71% late Wednesday.

The yield on the 10-year Treasury, which is the centerpiece of the bond market, fell to 4.27% from 4.36% on Wednesday and 4.70% in April. This is a notable move for the bond market and supports share prices.

In other trading on Monday, benchmark U.S. crude oil gave up 44 cents, falling to $82.72 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, fell 42 cents to $86.12 per barrel.

The US dollar rose to 160.75 Japanese yen from 160.72 yen.