Euro rises Post-French vote; Shares to Fall Monday: Markets Wrap

(Bloomberg) – Equities are set to start the week lower as investors weigh the potential for more aggressive rate hikes on the economy and earnings. The euro rose after Emmanuel Macron’s victory in the French election removed a significant risk to markets.

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Futures fell in Japan and earlier in Hong Kong. US contracts faltered after the S&P 500 limited the longest run of weekly losses since January, while the Nasdaq 100 is ready for the worst month since 2008, as traders raised expectations of steep political tightenings to tame inflation.

Macron defeated far-right leader Marine Le Pen in the French presidential election on a pro-business platform, strengthening the euro. The dollar was mixed against other major currencies. A dollar gauge closed higher Friday.

Investors will also keep a close eye on any policy action from China as Chinese assets are under pressure as the yuan falls to a one-year low on Friday. The nation’s Covid zero policy in the midst of a Covid outbreak also weighs on the mood.

Risk assets remain under pressure and bond markets increase their long-term inflation expectations. Federal Reserve Chairman Jerome Powell approved a 50 basis point increase next month and at least one more such step, outlining his most daring approach yet to curbing rising prices. Stronger tightening signals from the European Central Bank also undermine risk appetite.

“There has been little to ward off investor pessimism as inflation and interest rate expectations begin to bite,” said Geir Lode, head of global equities at Federated Hermes Ltd., in a note. “Particularly due to the uncertainty in the macro environment, expectations are low in terms of forward-looking estimates and guidance, based on lowered expectations from the previous quarter.”

The war in Ukraine continues to be an uncertain backdrop for the markets. US Secretary of State Antony Blinken and Secretary of Defense Lloyd Austin arrived in Kiev for negotiations as Russia’s war against Ukraine enters its third month.

Oil fell to $ 100 per barrel. barrel – after falling for the third week out of four – as China’s lockdowns amplify fears of demand. The markets in Australia and New Zealand are closed for public holidays on Monday.

Events to see this week:

  • Technological earnings include Alphabet, Meta Platforms, Amazon, Apple

  • EIA oil inventory report, Wednesday

  • Australia CPI, Wednesday

  • Bank of Japan’s Monetary Policy Decision, Thursday

  • US 1st Quarter GDP, Weekly Unemployment Applications, Thursday

  • The ECB will release its financial bulletin on Thursday

Some of the key movements in markets:

Equities

  • S&P 500 futures fell 0.2% from 1 p.m. 7:48 in Tokyo. The S&P 500 fell 2.8 percent.

  • Nasdaq 100 futures fell 0.2% Nasdaq 100 fell 2.7%

  • Nikkei 225 futures fell 1.2 percent.

  • Hang Seng Index futures fell 1.2% previously

Currencies

  • The Japanese yen fell 0.2% to $ 128.78 per dollar

  • The offshore yuan was 6.5292 per dollar

  • The Bloomberg Dollar Spot Index rose 0.7% on Friday

  • The euro rose 0.1% to $ 1.0801

Bonds

Raw materials

  • West Texas Intermediate crude fell 1.4% to $ 100.63 per barrel. barrel

  • Gold was at $ 1,932.43 an ounce

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