Asian stocks remained subdued on Monday as traders considered the U.S rates outlook, while the euro saw a slight increase after the far-right party in France’s snap election received fewer votes than expected.
The euro was up 0.32% at $1.0747, and European stock futures rose 1% as exit polls showed Marine Le Pen’s eurosceptic National Rally leading in the first round of the French vote.
The election results have caused uncertainty in the markets as both the far-right and left-wing parties have promised significant spending increases, despite France’s high budget deficit.
Market strategist Michael Brown noted that the outcome may not be as bad as anticipated, with other parties potentially withdrawing candidates to prevent the National Rally from winning seats in the next round.
Investors are now focused on the upcoming runoff election on Sunday, with uncertainty surrounding potential alliances between parties in France’s constituencies.
In Asia, the MSCI’s index of Asia-Pacific shares outside Japan fell by 0.18%, while Japan’s Nikkei rose by 0.57%. China’s manufacturing and services activities both declined in June, prompting calls for further economic stimulus.
The Federal Reserve’s decision on interest rates remains a key concern, with expectations of at least two rate cuts this year. U.S. inflation data for May was unchanged, with the PCE price index rising by 2.6% in the past 12 months.
The yen traded at around 160.98 per dollar following a revision to Japan’s GDP data, which revealed a larger economic contraction in the first quarter. Factory activity in Japan remained stagnant in June due to weak demand and rising costs.
The dollar index, which measures the U.S. dollar against other major currencies, was slightly lower at 105.65.
Overall, markets are facing high uncertainty amidst the election results and economic data, with investors closely watching for further developments in the coming weeks.