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(Bloomberg) — Asian stocks fell as investors parsed the potential impact of political volatility in France and elsewhere, while traders awaited policy decisions from major central banks due this week.

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MSCI’s Asia Pacific Index fell the most in two weeks, with Japanese stocks leading the decline. Hong Kong shares rose, then pared the gains, after data that showed Chinese retail spending beat forecasts. Benchmark 10-year Treasuries slipped and US equity futures were little changed. Markets including Singapore, India and Indonesia are closed for holidays.

The move to haven assets came as risk sentiment soured, with a gauge of global stocks falling the most in two weeks as France’s snap parliamentary election renewed investors’ focus on political volatility worldwide. The greenback inched higher.

“The investor uncertainty over ballot boxes shows up again – with the last two weeks highlighting the risks of volatility despite expectations for governmental changes – start with South Africa, continue to Mexico and now throw in Europe with the surprise French election,” said Bob Savage, head of markets strategy and insights at BNY Mellon. “In the next month, fears are rising about snap election risks in Japan and Germany given the weak government support showing up in polling there.”

European equity futures rose, signaling potential recovery after declines last week. The euro steadied after falling the most in two months last week. French bond futures declined.

The PBOC kept its one-year MLF interest rate unchanged at 2.5%. A slew of key economic data came mixed. While May retail spending beat estimates, industrial expansion slowed in May, a sign that deep imbalances in the economic recovery may be easing at least a little. Chinese property developers’ shares fell after home prices declined at a faster pace in May, as the country’s most forceful efforts to support the property market took time to revive demand.

Political Risks

A coalition of France’s left-wing parties presented a manifesto to pick apart most of Macron’s seven years of economic reforms and set the country on a collision course with the EU over fiscal policy. Far-right leader Marine Le Pen said she won’t try to push out President Emmanuel Macron if she wins France’s snap parliamentary election, in an appeal to moderates and investors.

The spread between French and German bonds widened sharply last week.

After the Federal Reserve pared back projections for US monetary easing this year, policymakers from the UK to Australia are likely to signal this week that they’re still not convinced enough about disinflation to start lowering borrowing costs themselves. Emerging market policy makers, including in Indonesia and Brazil, are also likely to push back on rate cut expectations.

Federal Reserve Bank of Minneapolis President Neel Kashkari over the weekend said the central bank can take its time and watch incoming data before starting to cut interest rates, echoing sentiment from Cleveland Fed President Loretta Mester — who still sees inflation risks as tilted to the upside.

US stocks struggled to gain traction Friday after a gauge of consumer sentiment sank to a seven-month low. The S&P 500 closed mildly lower, led by a drop in industrial shares. Tech outperformed, with Adobe Inc. up 15% on a strong outlook.

This week, traders will also be watching inflation readings in Europe and the UK to help finesse bets on the global monetary policy outlook. Meantime, a swath of Fed officials including Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee and Fed Governor Adriana Kugler are due to speak.

In commodities, oil slipped after its biggest weekly advance since early April.

Key events this week:

  • Italy CPI, Monday

  • US Empire manufacturing, Monday

  • ECB Chief Economist Phillip Lane speaks, Monday

  • Philadelphia Fed President Patrick Harker speaks, Monday

  • Australia rate decision, Tuesday

  • Chile rate decision, Tuesday

  • Eurozone CPI, Tuesday

  • Singapore trade, Tuesday

  • US retail sales, business inventories, industrial production, cross-border investment, Tuesday

  • Richmond Fed President Thomas Barkin, Dallas Fed President Lorie Logan, Fed Governor Adriana Kugler, St. Louis Fed President Alberto Musalem, Chicago Fed President Austan Goolsbee, Tuesday

  • Japan trade, Wednesday

  • Bank of Japan issues minutes of April policy meeting, Wednesday

  • UK CPI, Wednesday

  • Bank of Canada issues Summary of Deliberations, Wednesday

  • Brazil rate decision, Wednesday

  • New Zealand GDP, Thursday

  • China loan prime rates, Thursday

  • Indonesia rate decision, Thursday

  • Eurozone consumer confidence, Thursday

  • Norway rate decision, Thursday

  • Switzerland rate decision, Thursday

  • Eurozone finance ministers meet, Thursday

  • UK BOE rate decision, Thursday

  • US housing starts, initial jobless claims, Thursday

  • Japan CPI, Friday

  • Hong Kong CPI, Friday

  • India S&P Global Manufacturing PMI, Friday

  • Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday

  • UK S&P Global / CIPS Manufacturing PMI, Friday

  • US existing home sales, Conf. Board leading index, Friday

  • Canada retail sales, Friday

  • Richmond Fed President Thomas Barkin speaks, Friday

Some of the main moves in markets:


  • S&P 500 futures were little changed as of 2 p.m. Tokyo time

  • Japan’s Topix fell 1.9%

  • Australia’s S&P/ASX 200 fell 0.1%

  • Hong Kong’s Hang Seng was little changed

  • The Shanghai Composite fell 0.6%

  • Euro Stoxx 50 futures rose 0.4%


  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0704

  • The Japanese yen was unchanged at 157.40 per dollar

  • The offshore yuan was little changed at 7.2688 per dollar


  • Bitcoin fell 0.2% to $66,358.01

  • Ether fell 0.3% to $3,586.25



  • West Texas Intermediate crude fell 0.3% to $78.20 a barrel

  • Spot gold fell 0.4% to $2,323.56 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael G. Wilson, Masaki Kondo and Matthew Burgess.

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©2024 Bloomberg L.P.

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