The euro was largely stable following a decisive victory for Emmanuel Macron in France’s presidential election, while global equities followed Wall Street lower in the wake of Friday’s sharp sell-off and China’s currency continued to fall as lockdowns weighed on the country’s economic outlook.
The euro was off 0.1 per cent at about $1.0783 during Asian trading on Monday after the French president defeated far-right rival Marine Le Pen to win re-election, with projections showing he had secured more than 58 per cent of the vote.
“Macron’s election is above all a guarantee of continuity for the next five years,” said Charlotte De Montpellier, senior economist for France and Switzerland at ING. She added that French bonds and currency markets had already largely priced in a Macron win, but the victory “allows markets to contemplate the possibility of Macron enjoying a governing majority after the June parliamentary elections.”
However, futures markets tipped the Euro Stoxx 50 to shed 1.6 per cent in the wake of Friday’s sell-off on Wall Street, where the benchmark S&P 500 declined 2.8 per cent a day after Federal Reserve chair Jay Powell said a 0.5 percentage point rise in interest rates was “on the table” for May.
Shares in Asia were lower as well, with Japan’s Topix and Australia’s S&P/ASX 200 both down 1.6 per cent on Monday. Hong Kong’s Hang Seng index fell 2.6 per cent and benchmark CSI 300 index of Shanghai- and Shenzhen-listed stocks was down 2.2 per cent as the prospect of continued lockdowns in China weighed on sentiment.
China’s currency also lost ground, falling 0.7 per cent against the dollar to Rmb6.5443 and taking it about 3 per cent lower this year. The renminbi marked its biggest weekly slide against the greenback in three years last week as the country’s worsening economic outlook and rising returns on US debt undermined the allure of Chinese assets.
Lockdowns in China also weighed on oil prices, with international benchmark Brent crude down 2.7 per cent at $103.76 a barrel in Asian trading. West Texas Intermediate, the US marker, was off 2.8 per cent at $99.23.