- Euro Drops After German Vote; Gold Falls, Oil Dips
Politics dominated trading on Monday, with the euro sliding as Germany’s election result foreshadowed potentially complex political-coalition building. Gold fell as crude edged lower.
The common currency weakened against almost all its major peers after Chancellor Angela Merkel won Germany’s election with a smaller share of the vote, while the country’s main far-right party, Alternative for Germany, posted a surprisingly strong result. The yen declined ahead of a fresh stimulus package being unveiled by Japan’s prime minister before possible early elections. Stocks in Europe drifted after declines in Asia, and shares in developing nations slumped.
“The question is obviously now what it means for policy going forward” in Germany, Mitul Kotecha, head of Asia FX and rates strategy at Barclays Bank Plc, said on Bloomberg Television in reference to the election. “Investors are going to be closely following announcements on policy, especially given that fact that the AfD is not just nationalist, but also anti-euro to some extent.”
The process of building a new government could take weeks, so markets may well move on from the result quickly. Trouble continues to foment in the Catalonia region of Spain, while central banks grandees including Federal Reserve Chair Janet Yellen and European Central Bank President Mario Draghi are among those scheduled to speak this week.
Meanwhile, the New Zealand dollar lost as much as 1.1 percent amid disappointment the ruling party failed to get a majority in a weekend vote, kicking off what could be weeks of coalition-building talks.
Here are the main moves in markets:
Asia:
- Japan’s Topix index advanced 0.5 percent at the close in Tokyo. Australia’s S&P/ASX 200 Index ended virtually unchanged and South Korea’s Kospi index slid 0.4 percent.
- The Hang Seng Index in Hong Kong fell 1.4 percent with Chinese property developers slumping after several cities on the mainland tightened rules on home sales.
- The Japanese yen fell 0.2 percent to 112.19 per dollar.
Stocks
- The Stoxx Europe 600 Index fell less than 0.05 percent as of 8:36 a.m. London time.
- The MSCI All-Country World Index dipped 0.1 percent to the lowest in more than a week.
- The U.K.’s FTSE 100 Index fell 0.4 percent, the largest fall in more than a week.
- Germany’s DAX Index fell 0.1 percent, the biggest fall in more than a week.
- The MSCI Emerging Market Index decreased 0.7 percent to the lowest in more than two weeks.
- Futures on the S&P 500 Index fell 0.2 percent.
Currencies
- The Bloomberg Dollar Spot Index gained 0.1 percent.
- The euro decreased 0.3 percent to $1.1917.
- The British pound increased 0.4 percent to $1.3553.
Bonds
- The yield on 10-year Treasuries climbed less than one basis point to 2.26 percent.
- Germany’s 10-year yield was steady at 0.448 percent.
- Britain’s 10-year yield climbed one basis point to 1.366 percent.
Commodities
- Gold declined 0.4 percent to $1,292.40 an ounce.
- West Texas Intermediate crude fell 0.4 percent to $50.45 a barrel.
