HONG KONG — Asian stocks fell on Monday, with the euro falling on the shock outcome of the French election, while US stocks rose to record highs on Friday, boosted by a long awaited report on the labor market.
US futures and oil prices fall.
The euro rose above $1.08, but gains were tempered by surprise results in the French parliamentary election.
The left-wing New Popular Front has won the most seats in the 2024 French parliamentary election, which saw a far-right advance pushed back but failed to secure a majority. The result leaves France with the stunning prospect of a hung parliament and concerns about political and policy uncertainty.
The coin dropped from $1.0836 to $1.0819 on Monday.
In Tokyo, the Nikkei 225 index fell 0.3% to 40,780.70, despite official data showing real wages fell 1.4% year-on-year in May, a 26th straight monthly decline, as a weakening yen and higher commodity costs pushed up the cost of imports. While nominal wages rose 1.9%.
Hong Kong’s Hang Seng index fell 1.8% to 17,484.93 and 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.
Friday is the S&P 500 climbed 0.5 percent to 5,567.19, hitting an all-time high for the third straight day after Thursday’s trading pause for the Fourth of July holiday. The index has already set 34 records and is up nearly 17 percent this year, just over halfway through.
The Dow Jones Industrial Average rose 0.2% to 39,375.87, while the Nasdaq Composite rose 0.9% to 18,352.76.
The action was more decisive in the bond market, where Treasury yields fell after the U.S. jobs report. Employers hired more workers last month than economists had expected, but the number was still a slowdown from May hiring. In addition, the unemployment rate rose unexpectedly, growth in worker wages slowed and the U.S. government said hiring in previous months was lower than previously forecast.
Overall, the data reinforced Wall Street’s belief that U.S. economic growth is slowing under the weight of high interest rates. That’s exactly what investors want to see, because a slowdown would keep inflation under control and could the Federal Reserve begins austerity measures the highest interest rate in two decades.
The question is whether the economy can remain in this Goldilocks state of not too hot and not too cold as the Federal Reserve carefully timed its next moves. The hope is that the Fed will cut interest rates early and significantly enough to prevent the economic slowdown from sliding into recession, but not so much that inflation regains momentum and starts running again.
The clearest takeaway from the jobs report for financial markets was that it keeps the Fed on track to cut its key interest rate later this year, likely in September and perhaps again in December. The two-year Treasury yield, which closely matches expectations for Fed action, fell to 4.60% from 4.71% late Wednesday.
The yield on the 10-year Treasury note, the centerpiece of the bond market, fell to 4.27% from 4.36% late Wednesday and from 4.70% in April, a notable move for the bond market and a boost to stock prices.
In other trading on Monday, U.S. benchmark crude 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 US dollar rose to 160.75 Japanese yen from 160.72 yen.