- Euro Slips With Stock, After Renzi Resigns
The euro slumped with stock index futures and Italy’s bonds amid concern that nation’s vote against constitutional reform will embolden nationalist movements.
The common European currency touched its weakest point in 20 months and notes in Spain and Portugal also dropped. Prime Minister Matteo Renzi quit after losing a referendum he’d called to rein in the senate’s power. Asian shares fell, while government debt tracked a rebound in Treasuries from Friday, when mixed U.S. jobs data weighed on equities. Oil declined on signs producers outside of OPEC will boost output.
The defeat of Renzi’s reforms, aimed at simplifying the legislative process in a nation that’s seen 63 governments since the end of World War II, follows Britain’s shock vote to exit the European Union and Donald Trump’s unexpected victory. The euro’s losses were limited as Austrians spurned the appeal of an anti-immigration nationalist to elect a Green Party-backed economics professor as their next president.
“The first reaction to Renzi resigning is euro selling, but the more important event is parliament’s dissolution and the general election in Italy,” said Daisuke Karakama, chief market economist in Tokyo for Mizuho Bank Ltd. “Elections in the Netherlands, France, Germany and Italy next year will keep the euro pressured. The euro could reach $1.02 in January-March period. ”
Currencies
- The euro weakened 0.5 percent to $1.0611 as of 7:37 a.m. in London, paring a slump of as much as 1.5 percent from earlier in the session. Polls show an early election in Italy would see the anti-euro Five Star Movement swept into power. The Polish zloty lost 0.7 percent, the Danish krone slid 0.5 percent and the Japanese yen weakened 0.3 percent.
- The pound declined 0.2 percent. Divisions within the government were exposed as Foreign Secretary Boris Johnson declined to endorse the proposal of some colleagues that Britain consider paying the European Union for continued access to its markets after Brexit.
- The offshore yuan lost 0.1 percent as Chinese shares declined. The U.S. president-elect rejected criticism of his decision to take a phone call from Taiwan’s president and reiterated concerns over China’s currency and trade policies to his 16.6 million Twitter followers.
- The kiwi weakened 0.5 percent to 71.05 U.S. cents as New Zealand Prime Minister John Key, a former currency trader, said he’ll stand down and backed Finance Minister Bill English to succeed him.
- The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, jumped 0.4 percent following its first weekly retreat since Trump’s victory. The greenback has climbed on speculation he will stoke growth with fiscal stimulus.
- U.S. employers added 178,000 workers to payrolls last month, after rising by a revised 142,000 people in October, and the jobless rate slid to a nine-year low. Hourly wages declined for the first time since the end of 2014, data out Friday showed.
Bonds
- The yield on Italian notes maturing in a decade surged 10 basis points to 2.00 percent, while that on similar Spanish notes rose four basis points to 1.58 percent. The yield on the benchmark 10-year German bund rose two basis points to 0.30 percent.
- Yields on Australian government debt due in a decade slid seven basis points to 2.79 percent, similar maturity New Zealand notes yielded 3.19 percent, down five basis points, as rates on Chinese bonds dropped three basis points to 3.02 percent.
- Ten-year U.S. Treasury yields fell one basis point to 2.37 percent after shedding seven basis points on Friday.
Stocks
- Euro Stoxx 50 index futures slumped 0.7 percent, while those on the FTSE 100 Index dropped 0.5 percent.
- The MSCI Asia Pacific Index declined 0.6 percent, with Japan’s Topix index retreating 0.8 percent, Australia’s S&P/ASX 200 Index down 0.8 percent, the Kospi losing 0.4 percent in Seoul and New Zealand’s S&P/NZX 50 Index dropping 0.7 percent.
- The Shanghai Composite Index and the Hang Seng China Enterprises Index both lost 1.2 percent.
- Futures on the S&P 500 Index were little changed, after the underlying benchmark ended Friday up less than 0.1 percent.
Commodities
- West Texas Intermediate crude fell 0.8 percent to $51.27 a barrel, following its best week since 2011, as U.S. producers boosted the number of rigs drilling for crude to the most since January after OPEC approved its first supply cut in eight years.
- Copper for three-month delivery rallied 1.4 percent, while zinc gained 2.2 percent and Nickel rallied 1 percent. Gold swung between gains and losses, after falling 0.5 percent last week, its fourth straight weekly loss.
