Market Selloff Pauses as Le Pen Comments Soothe: Markets Wrap

Date:

(Bloomberg) — A selloff in European stocks and bonds paused Monday after assurances from France’s far-right leader Marine le Pen that she will respect political institutions if she wins the upcoming snap parliamentary election.

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The Paris market bounced as much as 1% following last week’s 6.2% tumble that wiped more than $200 billion off its value. French bond yields were little changed near 3.18% even as their premium relative to German peers stayed near their widest in years. The euro steadied just off six-week lows against the dollar.

The Stoxx 600 was little changed, while US equity futures were mixed, with contracts on the S&P 500 dipping and those on the Nasdaq 100 slightly higher.

Le Pen said she won’t try to push out President Emmanuel Macron if she wins France’s snap parliamentary election in an apparent appeal to moderates and investors. Her group, the National Rally, is on track to become the biggest party in the lower house.

Populist politicians have a history of moving closer to the center once they reach power, a trend reflected in Le Pen’s latest comments, according to Frédérique Carrier, head of investment strategy at RBC Wealth Management.

“It’s possible that these signs of them being a little bit less radical and wanting to play nice might encourage the market a little bit,” Carrier said.

ECB Officials See No Cause for Alarm Over French Market Turmoil

Sentiment remains fragile. Citigroup analysts warned that a potential far-right majority in France is among the risk factors for European equities. Meanwhile, a coalition of France’s left-wing parties has presented a manifesto to pick apart most of Macron’s economic reforms.

Markets’ monetary policy angst could also return this week. The Bank of England’s Thursday meeting could signal that a July 4 election and lingering price pressures will force rate-setters to wait until August at least before easing policy. Peers in Australia and Norway, also meeting this week, also seem to be in no hurry to cut rates.

A swath of Federal Reserve officials including Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee and Fed Governor Adriana Kugler are due to speak.

For Bond Traders, Data Matter More Than What the Fed Is Saying

Earlier in the day, China’s PBOC kept its one-year MLF interest rate unchanged. Data continues to indicate economic grwoth remains under pressure, and property developers’ shares fell after home prices declined at a faster pace in May, despite recent efforts to support the real estate market.

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:

Stocks

  • The Stoxx Europe 600 was little changed as of 9:50 a.m. London time

  • S&P 500 futures were little changed

  • Nasdaq 100 futures rose 0.1%

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • The MSCI Asia Pacific Index fell 0.8%

  • The MSCI Emerging Markets Index fell 0.2%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0709

  • The Japanese yen fell 0.1% to 157.59 per dollar

  • The offshore yuan was little changed at 7.2691 per dollar

  • The British pound fell 0.1% to $1.2674

Cryptocurrencies

  • Bitcoin fell 0.4% to $66,195.1

  • Ether fell 1.6% to $3,541.35

Bonds

  • The yield on 10-year Treasuries advanced two basis points to 4.24%

  • Germany’s 10-year yield advanced three basis points to 2.39%

  • Britain’s 10-year yield advanced three basis points to 4.08%

Commodities

  • Brent crude rose 0.4% to $82.94 a barrel

  • Spot gold fell 0.5% to $2,320.70 an ounce

This story was produced with the assistance of Bloomberg Automation.

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

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