Euro slips in Asian trade after snap French poll

Hong Kong   -   The euro slipped in Asian trade on Monday after snap French elections in which a hung parliament appeared the likeliest outcome, as markets in the region searched for direction after Wall Street closed the previous week on a strong note.

In France, the left was set to emerge as the biggest group in a new parliament, beating out a resurgent far right in a vote called by President Emmanuel Macron three years ahead of schedule. Macron’s centrist alliance will have dozens fewer members of parliament, but held up better than expected and could end up in second.

The outcome, in which no bloc is expected to have an outright majority, has left the country in a “thick fog” of uncertainty, according to one pollster, with the euro dropping around 0.4 percent from Friday’s levels before clawing back some of its losses. “The best that can be said is that neither the (left-wing) NFP nor (far-right) National Rally will be able to implement their respective electoral manifestos in full, which would most worry investors fretful about France’s fiscal situation,” Alvin Tan of RBC capital markets said.

While “the worst outcome for the euro has been averted for now”, Tan added, uncertainty remains “and the fiscal balance is unlikely to improve significantly as a result”. On Wall Street, the Nasdaq and S&P 500 hit fresh highs on Friday, and the Dow Jones Industrial Average also ticked upwards after official data showed the US labour market cooling steadily, raising expectations of a September interest rate cut. In Asia, Tokyo’s Nikkei index seesawed in and out the red in early trade on Monday, but appeared to firm up gains as the morning wore on, with Mizuho Securities predicting a rebound to levels near recent highs.

But on the whole, markets were mixed, with Taipei making strong gains, and Manila and Jakarta also rising, while Hong Kong, Shanghai, Sydney and Seoul were down. Thousands of workers in South Korea walked off the job at tech giant Samsung Monday morning as they kicked off a three-day general strike, according to a union rep, who warned key memory chip production would be affected. Samsung Electronics is the world’s largest memory chip maker and accounts for a significant chunk of global output.

Thousands of workers gathered outside the company’s foundry and semiconductor factory in Hwaseong, Gyeonggi, an hour south of Seoul, with National Samsung Electronics Union head Son Woo-mok warning: “Today’s general strike is just the beginning.” However, the tech giant’s shares were largely unchanged in morning trade from Friday’s price, which was buoyed by a company forecast that second-quarter profits would beat expectations by more than 25 percent.

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