European stocks struggled for direction as investors looked out for the next steps in France’s battle to repair its finances. A rally in US and European bonds came to a halt.
The Stoxx 600 erased early gains as French President Emmanuel Macron moved to appoint a new premier within days, following the ouster of Prime Minister Francois Bayrou. Anglo American Plc gained more than 8% after agreeing to a tie-up with Canada’s Teck Resources Ltd. Debt yields rose across the board.
In US assets, futures for the S&P 500 rose 0.1% after the benchmark closed near an all-time high. Treasuries dropped across the curve, with the 10-year rate rising three basis points to 4.07%. The dollar nudged lower to head for a third day of losses.
French assets have come under pressure amid continued uncertainty as Macron seeks a premier capable of steering a budget through a deeply fractured National Assembly. The continued lack of common ground is weighing on sentiment, driving up the country’s risk premium.
“No one was expecting a bloodbath on the markets today, it’s clear that the worst-case scenario of snap elections is not taking place, at least right now,” said Vincent Juvyns, chief investment strategist at ING in Brussels. “So at the moment we’re muddling through, but with a spread with Germany that is at levels of the sovereign debt crisis of 2012.”
In Asia, the yen extended gains after Bloomberg News reported that Bank of Japan officials are of the view that another hike in the benchmark rate could be possible this year. The tightening would be in spite of domestic political instability, as economic conditions have so far evolved in line with expectations.
Shares in Indonesia declined after the longtime finance minister was removed. Yield premiums on Indonesian dollar bonds and the cost to insure them against default widened.
Oil rose for a second day as investors weighed the prospect for softening demand after Saudi Arabia cut pricing for most of its grades. Iron ore climbed for a sixth day and headed for its highest close in more than six months on expectations that Chinese demand will gather momentum.
Stocks
The Stoxx Europe 600 was little changed as of 9:29 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.7%
The MSCI Emerging Markets Index rose 1%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro was little changed at $1.1756
The Japanese yen rose 0.6% to 146.68 per dollar
The offshore yuan was little changed at 7.1222 per dollar
The British pound rose 0.2% to $1.3572
Cryptocurrencies
Bitcoin rose 1% to $113,068.5
Ether rose 1.4% to $4,358.81
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.07%
Germany’s 10-year yield advanced three basis points to 2.67%
Britain’s 10-year yield advanced three basis points to 4.63%
Commodities
Brent crude rose 1.2% to $66.78 a barrel
Spot gold rose 0.3% to $3,645.58 an ounce
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