Asian Stocks Gain, Euro Edges Lower on French Vote: Markets Wrap

(Bloomberg) — Asian shares gained as a rally in Taiwan Semiconductor Manufacturing Co. helped push up the region’s benchmark equities index. The euro edged lower on concern about France’s post-election finances.

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The MSCI Asia Pacific Index of stocks climbed as much as 0.4%, with heavyweight TSMC advancing to a record after Morgan Stanley increased its price target for the company. Adding to the impetus was Friday’s US payroll data that buttressed the case for the Federal Reserve to pivot to interest-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 ballot. The outcome potentially constrains the influence of the left-wing New Popular Front coalition and Marine Le Pen’s National Rally, both of which advocate increased public spending.

Bitcoin fell with other cryptocurrencies due to concern over possible sales of the token by creditors of the failed Mt. Gox exchange. In China, the central bank sought take more control of market interest rates by announcing additional open market operations and tightening the band within which short-term rates can fluctuate.

Boeing Co. agreed to plead guilty to criminal conspiracy to defraud the US after the Justice Department concluded the planemaker failed to adhere to an earlier settlement stemming from two crashes of its 737 Max jetliner.

France was a big focus for investors early Monday. The New Popular Front — which includes the Socialists and far-left France Unbowed — won 178 seats in the National Assembly, according to data compiled by the Interior Ministry. National Rally, which pollsters last week had seen winning the election, came third with 143, while President Emmanuel Macron’s centrist alliance notched up 156.

French government bond futures underperformed their German peers, though in a sign of jitters waning, the spread between the two has begun to narrow.

“We view the outcome as broadly market-friendly, with National Rally-related risks disappearing for now and the left/far-left NFP set to fall far short of a majority with essentially no prospect of being able to enact its agreed alliance agenda,” Krishna Guha, a strategist at Evercore ISI, wrote in a note to clients.

For the remainder of the week, events in the US will likely shape trading.

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Federal Reserve Chair Jerome Powell’s congressional testimony and US inflation data are among the main events this week. Traders will be looking to the two to solidify bets policy easing may begin as early as September amid signs the US economy is weakening based on the latest jobs report.

The prospect of a Fed interest-rate cut in coming months got a boost on Friday after nonfarm payrolls data showed US hiring and wage growth stepped down in June, while the jobless rate rose to the highest since late 2021.

Earnings from major US banks including JPMorgan Chase & Co. are also due, as are rate decisions in New Zealand and South Korea.

President Joe Biden faces a fresh round of hazards from members of his own party as he seeks to salvage his embattled reelection bid and fend off calls from Democratic lawmakers to step aside. Biden registered his best showing yet in a Bloomberg News/Morning Consult tracking poll of battleground states, even as voters offered withering appraisals of his debate performance.

In commodities, both gold and oil steadied. In the case of the latter, traders tracked twin threats to production posed by a storm in the US and wildfires in Canada.

Key events this week include:

• Indian Prime Minister Narendra Modi visits Moscow, Monday

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

• US Treasury Secretary Janet Yellen testifies to the House Financial Services Committee, Tuesday

• Fed Vice Chair for Supervision Michael Barr, Governor Michelle Bowman speak, Tuesday

• China PPI, CPI, Wednesday

• Japan PPI, Wednesday

• Fed Chair Jerome Powell testifies to the House Financial Services Committee, Wednesday

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

• BOE chief economist Huw Pill, BOE policy maker Catherine Mann speak, Wednesday

• US CPI, initial jobless claims, Thursday

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

• Japan industrial production, Friday

• China trade, Friday

• US University of Michigan consumer sentiment, PPI, Friday

• Citigroup, JPMorgan, Wells Fargo and Bank of New York Mellon report quarterly earnings, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 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 was little changed at $1.0831

• The Japanese yen rose 0.1% to 160.55 per dollar

• The offshore yuan was unchanged at 7.2889 per dollar

Cryptocurrencies

• Bitcoin fell 3.6% to $55,226.86

• Ether fell 3.7% to $2,888.55

Bonds

Commodities

• West Texas Intermediate crude 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 assistance of Bloomberg Automation.

This story was produced with the assistance of Bloomberg Automation.

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

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