FX168 Financial News (Asia Pacific) News After Friday's US non-farm payrolls data maintained the “soft landing” theme, investors started the new week with a sense of joy. This lowered the dollar and bond yields and added impetus to the stock market's continued “risk appetite” market.
Most of the world's major stock markets are at record or multi-year highs, and nothing seems to hold them back in the short term. However, today, Hong Kong's Hang Seng Index fell 0.46%, and Mainland China's Shanghai and Shenzhen 300 Index fell 0.3%, falling for the fifth consecutive trading day, the lowest level since February.
Profit returns, quarter-end position adjustments, concerns about valuation or market concentration, and political or policy unease have all played a role recently. But the overwhelming “buy on dips” mentality ensures that any pullbacks are shallow and short in time.
The French election is upsetting!
European politics may have some impact on Monday's (July 8) Asian morning trading — France is likely to have a suspended parliament in Sunday's election, and the left-wing coalition unexpectedly took the lead, surpassing the extreme right of the extreme right. This major accident caused the anti-euro far-right National Union Party to lose the chance to form a government.
Specifically, the left-wing political party coalition “New People's Front” won about 175 to 205 seats but did not get an absolute majority of seats. The ruling Baath Party and the centrist coalition followed suit with about 150 to 175 seats, while the far-right political party, the National Union only received about 115 to 150 seats.
Analysts believe that a “suspended parliament” means a politically weak government. Serious differences in parliament mean that at a time when the fiscal deficit is high, it is difficult for any government to pass the necessary budget reduction plan. Meanwhile, the left-wing coalition advocated a drastic increase in government spending and proposed policies such as abolishing pension reforms and raising the minimum wage.
Andrea Tueni, head of sales and transactions at Saxo Bank of France, said that this was a huge accident and a real blow to the National League, but this may not necessarily be a good thing for the market. A left-wing lead may cause concern, and their plans are least popular in the market.
The Asian market opened well. Japan's Nikkei 225 Index hit a new high of 41,100 points last Friday, surging about 7% in two weeks. The MSCI Emerging Markets and MSCI Asia (excluding Japan) Index also reached their highest level in two years.
More broadly, the MSCI World Index, the S&P 500 Index, and the Nasdaq Index all hit record highs last week, and Eurozone stocks hit new highs in 23 years last month. The UK's FTSE 100 Index hit a record high in May.
Monday's Asia-Pacific economic calendar was relatively light, focusing on Japan's bank loans, trade and current account, and overtime pay data. Bank of the Philippines Governor Eli Remolona and Treasury Secretary Ralph Recto will also speak at Monday's business forum.
Overtime pay in Japan is generally not seen as an important indicator, but this month is worth watching. According to a recent trade union survey, the average salary increase of 5.1% for companies this year is the biggest increase in 33 years, far exceeding the current inflation rate of around 2%.
However, Friday's data showed that household spending fell sharply in May as rising prices continued to squeeze consumers' purchasing power. This is a headache for Bank of Japan policymakers. They want to raise interest rates and have high hopes for wage increases, but they are also worried about the impact on the economy, which has yet to fully recover.
Looking ahead, the most market-sensitive events in Asia this week may be central bank policy meetings in New Zealand, South Korea, and Malaysia, as well as producer and consumer price inflation data in China.
The main drivers for global markets are likely to be the US CPI inflation data on Thursday, and Federal Reserve Chairman Powell's two-day congressional testimony on Tuesday and Wednesday.