Source: AFP
Asian markets were mostly lower on Monday after last week’s losses, with traders trying to assess the Federal Reserve’s interest rate plans, while the euro was weighed down by political uncertainty as France prepares for early parliamentary elections.
While data showing US inflation slowed in May provided fresh hope that the central bank will cut interest rates this year, the optimism was tempered by policymakers’ expectations of how much.
And over the weekend, Minneapolis Fed chief Neel Kashkari said officials need not rush to ease policy, while his Cleveland counterpart, Loretta Mester, remained concerned that inflation could rebound.
Meanwhile, rising prices are weighing on consumer sentiment, with the index hitting a seven-month low in June, data showed.
The Fed now sees just one rate cut this year, with analysts ranging from zero to three.
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In Asian markets, the yen retreats ahead of the Bank of Japan’s key decision
Traders are now awaiting the release of a US retail sales report, as well as inflation data and central bank policy decisions in various countries over the next five days.
While the Nasdaq hit another record high, Wall Street provided a tepid lead with the S&P 500 and Dow both falling.
Tokyo, Shanghai, Sydney, Seoul and Wellington all fell, although Hong Kong and Taipei rose.
Many markets, including Jakarta, Mumbai and Singapore, were closed for public holidays.
There was little reaction to Chinese data in May that showed retail sales beat expectations — bolstering hopes of improving consumer activity — but industrial production rose less than forecast and house prices fell further.
The euro faced further pressure from the dollar on concerns over the upcoming polls in France, which President Emmanuel Macron called after his party’s defeat by the far-right National Rally (RN) in last weekend’s EU-wide elections.
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The UK Labor Party is seeking power with a commitment to ‘wealth creation’.
The move has sparked fears for stability in Europe’s second-biggest economy, and observers said the country could be on a collision course with the bloc if the extremists prevail.
Left parties, including the hard-left France Unbowed, the Socialist, Communist and Green parties said they had agreed – despite long-standing political differences – on a pre-election alliance to fight the RN and its leader Marine Le Pen.
The group has drawn up a manifesto that reverses a number of Macron’s reforms over the past seven years, while rejecting the European Union’s fiscal pact governing debt and deficits.
“Uncertainty about the extent to which the far-right RN party will effectively control the next French parliament after July 7 will be a continuing source of market stress over the next two to three weeks,” said Ray Attrill at National Australia Bank.
Election worries hit Paris stocks last week, sending them down more than two percent on Friday, weighing on other European bourses.
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Asian shares rest on Wall St records after US inflation data
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 1.8% to 38,106.41 (break)
Hong Kong – Hang Seng Index: UP 0.9 percent at 18,097.45
Shanghai Composite: DOWN 0.4 percent at 3,021.24
EUR/USD: DOWN to $1.0700 from $1.0708 on Friday
Euro/pound: DOWN to 84.36 pence from 84.38 pence
Dollar/yen: UP to 157.49 yen from 157.37 yen
GBP/USD: DOWN to $1.2685 from $1.2689
West Texas Intermediate: DOWN 0.2% to $78.29 a barrel
Brent North Sea crude: DOWN 0.2 percent at $82.46 a barrel
New York – Dow Jones: DOWN 0.2 percent at 38,589.16 (close)
London – FTSE 100: Down 0.2% to 8,146.86 (close)
Source: AFP