Market Selloff Halts As Le Pen’s Comments Calm: Markets Reel

(Bloomberg) — A sell-off in European stocks and bonds was halted Monday after assurances from France’s far-right leader Marine Le Pen that she will respect political institutions if she wins the upcoming snap parliamentary election.

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The Paris market rose 1% after last week’s 6.2% drop that wiped more than $200 billion off its value. French bond yields were little changed near 3.18%, although their premium over German counterparts remained near the highest level in years. The euro is just shy of six-week lows against the dollar.

The Stoxx 600 was little changed, while U.S. stock futures were mixed, with the S&P 500 down and the Nasdaq 100 slightly higher.

Le Pen said she would not try to oust President Emmanuel Macron if she wins France’s snap parliamentary election, in an apparent appeal to moderates and investors. Her group, Rally National, is on track to become the largest party in the lower house.

According to Frédérique Carrier, head of investment strategy at RBC Wealth Management, populist politicians have a history of moving closer to the center once in power, a trend reflected in Le Pen’s recent comments.

“It’s possible that these signs that they’re a little less radical and want to play nice might encourage the market a little bit,” Carrier said.

ECB officials see no reason for alarm over the turmoil in the French market

The feeling remains fragile. Citigroup analysts warned that a possible far-right majority in France is among the risk factors for European stocks. Meanwhile, a coalition of France’s left-wing parties has presented a manifesto to single out most of Macron’s economic reforms.

Markets’ monetary policy anxiety could also return this week. The Bank of England’s meeting on Thursday could signal that the July 4 election and continued price pressures will force rate-setters to wait until at least August before easing policy. Peers in Australia and Norway, which also meet this week, also appear to be in no rush to cut rates.

A number of Federal Reserve officials, including Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee and Fed Governor Adriana Kugler, will speak.

For bond traders, data matters more than what the Fed says

The story continues

Earlier in the day, China’s PBOC kept its one-year MLF interest rate unchanged. Data continued to show that economic growth remains under pressure and shares in property builders fell as house prices fell at a faster pace in May, despite recent efforts to support the property market.

In commodities, oil slipped after its biggest weekly advance since early April.

This week’s highlights:

• Italian CPI, Monday

• Production of the American Empire, Monday

• ECB Chief Economist Phillip Lane speaks on Monday

• Philadelphia Fed President Patrick Harker speaks on Monday

• Australia’s rate decision on Tuesday

• Chile’s rate decision on Tuesday

• Eurozone CPI, Tuesday

• Trade in Singapore, Tuesday

• US retail sales, business inventories, industrial production, cross-border investment, Tuesday

• Richmond Fed President Thomas Barkin, Dallas Fed President Lorie Logan, Fed Governor Adriana Kugler, St. Louis Fed President Alberto Musalem Chicago Fed President Austan Goolsbee on Tuesday

• Trade in Japan, Wednesday

• The Bank of Japan releases the minutes of its April policy meeting on Wednesday

• UK CPI, Wednesday

• The Bank of Canada releases a summary of the discussions on Wednesday

• Brazil rate decision on Wednesday

• New Zealand GDP, Thursday

• Key lending rates in China on Thursday

• Indonesia rate decision on Thursday

• Consumer confidence in the Eurozone, Thursday

• Norway’s rate decision on Thursday

• Swiss rate decision on Thursday

• Eurozone finance ministers meeting on Thursday

• UK BOE rate decision on Thursday

• US housing starts, initial jobless claims on Thursday

• Japan’s CPI, Friday

• Hong Kong CPI, Friday

• India S&P Global Manufacturing PMI, Friday

• Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday

• UK S&P Global / CIPS Manufacturing PMI, Friday

• US Existing Home Sales, Conf. The main index of the board, Friday

• Canadian retail sales on Friday

• Richmond Fed President Thomas Barkin speaks on Friday

Some of the main movements in the markets:

INVENTORY

• The Stoxx Europe 600 was little changed as of 9:50 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures rose 0.1%

• Dow Jones Industrial Average futures fell 0.2%

• MSCI Asia Pacific index fell 0.8%

• MSCI Emerging Markets Index fell 0.2%

currencies

• The Bloomberg Dollar Spot Index is little changed

• The euro is little changed at $1.0709

• The Japanese yen fell 0.1% to 157.59 per dollar

• The offshore yuan was little changed at 7.2691 per dollar

• The British pound fell 0.1% to $1.2674

Cryptocurrencies

• Bitcoin fell 0.4% to $66,195.1

• Ether fell 1.6% to $3,541.35

BONDS

• The 10-year Treasury yield advanced two basis points to 4.24%

• Germany’s 10-year yield advanced three basis points to 2.39%

• Britain’s 10-year yield advanced three basis points to 4.08%

wares

• Brent crude rose 0.4% to $82.94 a barrel

• Gold in the country fell 0.5% to $2,320.70 an ounce

This story was produced with the help of Bloomberg Automation.

–With assistance from Michael G. Wilson, Masaki Kondo, Matthew Burgess, and Winnie Hsu.

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