HONG KONG (AP) — Asian stocks fell Monday and the euro slid after the shock results of the French election, but U.S. stocks rose to a record high on Friday, boosted by a highly anticipated job market report.
US futures and oil prices fall.
The euro rose above $1.08 but gains were capped by the surprise outcome of the French parliamentary elections.
The left-wing New Popular Front won the most seats in the 2024 French parliamentary elections, thwarting gains by the far right but falling short of a majority, leaving France facing the surprising possibility of a hung parliament and concerns about political and policy uncertainty.
The currency fell to $1.0819 from $1.0836 on Monday.
In Tokyo, official data showed real wages fell 1.4% in May from a year earlier, the 26th consecutive month of declines, while the Nikkei stock average fell 0.3% to 40,780.70 as a weaker yen and rising raw material prices pushed up import costs. Nominal wages rose 1.9%.
Hong Kong’s Hang Seng Index fell 1.8% to 17,484.93, while the Shanghai Composite Index fell 0.7% to 2,928.08.
Australia’s S&P/ASX 200 fell 0.8% to 7,763.20, while South Korea’s KOSPI fell 0.1% to 2,859.20.
On Friday, the S&P 500 rose 0.5% to 5,567.19, its third straight day of record highs following Thursday’s Independence Day holiday break. The index has already set 34 records this year and is up nearly 17%, but is still just over halfway there.
The Dow Jones Industrial Average rose 0.2%, to 39,375.87, and the Nasdaq Composite added 0.9%, to 18,352.76.
In the bond market, the move was more decisive. Treasury yields fell following the U.S. employment report. Companies hired more workers last month than economists expected, but the job gains still slowed from May’s. Moreover, the unemployment rate unexpectedly rose, worker wage growth slowed, and the U.S. government said last month’s employment numbers were lower than previously indicated.
Overall, the data reinforced Wall Street’s view that U.S. economic growth is slowing under the weight of high interest rates — just what investors are hoping would tame inflation and encourage the Federal Reserve to start cutting its key interest rate from its highest level in two decades.
The question is whether the economy can stay in this Goldilocks state — not too hot, not too cold — long enough for the Fed to accurately predict its next move. The hope is that the Fed will cut rates early and far enough to keep the slowdown from tipping into a recession, but not so low that inflation regains momentum and rises again.
For financial markets, the clearest takeaway from the jobs report is that the Fed is maintaining its outlook for a cut in its key interest rate later this year, likely in September and possibly as soon as December.The yield on the two-year Treasury note, which tracks closely with expectations of Fed action, fell to 4.60% from 4.71% late Wednesday.
The yield on the 10-year Treasury note, the backbone of the bond market, fell to 4.27% at Wednesday’s close, down from 4.36% and 4.70% in April, a notable move for the bond market and one that has helped support stocks.
In other trading on Monday, benchmark U.S. crude oil fell 44 cents to $82.72 a barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, fell 42 cents to $86.12 a barrel.
The U.S. dollar rose to 160.75 yen from 160.72 yen.
