Asia shares stumble; political uncertainty grips euro
Asian stocks sank on Monday as traders heavily pared back on bets for Federal Reserve rate cuts this year given a still-tight U.S. labour market, while a snap election call in France sparked wider political concerns and weighed on the euro.
Trading was thinned in Asia with Australia, China, Hong Kong and Taiwan out for public holidays, but MSCI's broadest index of Asia-Pacific shares outside Japan still slumped 0.46%.
U.S. futures eased slightly, with S&P 500 futures and Nasdaq futures down about 0.03% each, while the dollar was back on the front foot.
The halt in the global risk rally came on the back of Friday's nonfarm payrolls report which showed the U.S. economy created far more jobs than expected in May and annual wage growth reaccelerated, underscoring the resilience of the labour market.
Futures now show roughly 36 basis points (bps) worth of cuts priced in for the Fed, down from 50 bps last week. The odds for an easing cycle beginning in September have also lengthened.
The latest developments come ahead of the Fed's policy decision on Wednesday, with U.S. inflation figures for May due just before that.
«It's going to be very difficult for the Fed to continue predicting three rate cuts this year,» said Rob Carnell, ING's regional head of research for Asia-Pacific.
«Quite a few of the Fed speakers are talking about the possibility of just one (cut). While the most likely outcome is we'll see the three move to two, it is possible we just get a move to one.»
U.S. Treasury yields similarly rose on
