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Euro Slips After French Vote as Busy Week Begins: Markets Wrap - BLOOMBERG
BY , Bloomberg News
, Bloomberg
(Bloomberg) -- European stocks rose as initial nerves about the outcome of France’s election led to optimism politicians can form a more moderate coalition keeping the far right at bay. The euro erased losses.
Meanwhile, US Treasuries started off the week on the backfoot, as traders brace for Federal Reserve Chair Jerome Powell’s congressional testimony and US inflation data this week. Contracts on the S&P 500 and Nasdaq 100 were little changed, while Europe’s benchmark Stoxx Europe 600 benchmark climbed 0.4%.
A surprise victory by a left-wing coalition in legislative elections on the weekend saw France’s New Popular Front — which includes the Socialists — come first but without enough seats to form a government. The outcome potentially constrains the influence of the left-wing coalition and Marine Le Pen’s National Rally, both of which advocate increased public spending.
“It was a big surprise, of course, but when you look at the market reaction today, it is flattish. There is no clear majority for the national assembly and no majority for the far left,” Nicolas Forest, chief investment officer at Candriam, said in an interview with Bloomberg TV. If President Emmanuel “Macron should find a new coalition between the center and center-left, it’s not dramatic,” he said.
A left-wing alliance including the far-left group France Unbowed will be the biggest group with 178 out of 577 seats in the lower house, but still way short of the 289 required for an absolute majority. Macron’s group was second with Le Pen’s party trailing in third place.
In the runup to the vote, investors had been concerned about the prospect of a far-right takeover after Macron’s crushing defeat in last month’s European parliamentary elections.
In a sign of jitters waning, the extra yield investors demand to hold French bonds versus their German peers narrowed to around 70 basis points, below levels seen at the height of the market rout last month.
Earnings from major US banks including JPMorgan Chase & Co. are also due this week. In other corporate news, 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.
Meanwhile, President Joe Biden’s continues to salvage his embattled reelection bid, fending 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.
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.
In commodities, oil edged lower after four straight weekly gains, even as traders tracked twin threats to crude production posed by a hurricane in the US and wildfires in Canada. Gold was steady, and iron ore extended a decline from a one-month high.
