Stocks climb as France's far-left misses majority: Markets Wrap

　　(Bloomberg) — European stocks edged higher as traders digested the unexpected result of Frances snap election, which leaves the left-wing grouping without enough seats to form a government. The euro erased losses and French bonds were little changed.

　　The Stoxx Europe 600 benchmark climbed 0.5% after reversing an early decline, while Frances CAC 40 Index (^FCHI) erased early losses following the surprise victory by a left-wing coalition in legislative elections.

　　While France‘s New Popular Front — which includes the Socialists — came first in the weekend vote, financial market losses were were tempered by news that no party won the majority needed to govern. The outcome potentially constrains the influence of the left-wing coalition and Marine Le Pen’s National Rally, both of which advocate increased public spending.

　　“It was a big surprise, of course, but when you look at the market reaction today, it is flattish. There is no clear majority for the national assembly and no majority for the far left,” Nicolas Forest, chief investment officer at Candriam, said in an interview with Bloomberg TV. If President Emmanuel “Macron should find a new coalition between the center and center-left, its not dramatic.”

　　In the runup to the vote, investors had been concerned about the prospect of a far-right takeover after Macron‘s crushing defeat in last month’s European parliamentary elections.

　　In a sign of jitters waning, the extra yield investors demand to hold French bonds versus their German peers narrowed to around 70 basis points, below levels seen at the height of the market rout last month.

　　A left-wing alliance including the far-left group France Unbowed will be the biggest group with 178 out of 577 seats in the lower house, but still way short of the 289 required for an absolute majority. Macron‘s group was second with Le Pen’s party trailing in third place.

　　France Dodges Far-Right Win But Macron Has No One to Govern

　　US equity futures retreated after last week‘s rally on Wall Street, with Federal Reserve Chair Jerome Powell’s congressional testimony and US inflation data among the main events this week. Traders will be looking to the two to solidify bets policy easing may begin as early as September.

　　Treasury yields ticked higher and the dollar steadied after last weeks decline.

　　Story continues

　　Earnings from major US banks including JPMorgan Chase & Co. are also due this week. In other corporate news, Boeing Co. agreed to plead guilty to criminal conspiracy to defraud the US after the Justice Department concluded the planemaker failed to adhere to an earlier settlement stemming from two crashes of its 737 Max jetliner.

　　Meanwhile, President Joe Bidens continues to salvage his embattled reelection bid, fending off calls from Democratic lawmakers to step aside. Biden registered his best showing yet in a Bloomberg News/Morning Consult tracking poll of battleground states, even as voters offered withering appraisals of his debate performance.

　　Bitcoin fell with other cryptocurrencies due to concern over possible sales of the token by creditors of the failed Mt. Gox exchange. In China, the central bank sought take more control of market interest rates by announcing additional open market operations and tightening the band within which short-term rates can fluctuate.

　　In commodities, oil edged lower after four straight weekly gains, even as traders tracked twin threats to crude production posed by a hurricane in the US and wildfires in Canada. Gold was steady, and iron ore extended a decline from a one-month high.

　　Key events this week include:

• Indian Prime Minister Narendra Modi visits Moscow, Monday
• Fed Chair Jerome Powell delivers semi-annual testimony to the Senate Banking Committee, Tuesday
• US Treasury Secretary Janet Yellen testifies to the House Financial Services Committee, Tuesday
• Fed Vice Chair for Supervision Michael Barr, Governor Michelle Bowman speak, Tuesday
• China PPI, CPI, Wednesday
• Japan PPI, Wednesday
• Fed Chair Jerome Powell testifies to the House Financial Services Committee, Wednesday
• Chicago Fed President Austan Goolsbee and Fed Governor Michelle Bowman speak, Wednesday
• BOE chief economist Huw Pill, BOE policy maker Catherine Mann speak, Wednesday
• US CPI, initial jobless claims, Thursday
• Atlanta Fed President Raphael Bostic, St. Louis Fed President Alberto Musalem speak
• Japan industrial production, Friday
• China trade, Friday
• US University of Michigan consumer sentiment, PPI, Friday
• Citigroup, JPMorgan, Wells Fargo and Bank of New York Mellon report quarterly earnings, Friday

　　Some of the main moves in markets:

　　Stocks

• The Stoxx Europe 600 rose 0.5% as of 9:10 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were little changed
• The MSCI Asia Pacific Index fell 0.2%
• The MSCI Emerging Markets Index rose 0.2%

　　Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0841
• The Japanese yen fell 0.1% to 160.92 per dollar
• The offshore yuan was little changed at 7.2877 per dollar
• The British pound was little changed at $1.2817

　　Cryptocurrencies

• Bitcoin fell 2.1% to $56,071.89
• Ether fell 1.8% to $2,945.17

　　Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.30%
• Germanys 10-year yield advanced two basis points to 2.57%
• Britains 10-year yield was little changed at 4.13%

　　Commodities

• Brent crude fell 0.4% to $86.19 a barrel
• Spot gold fell 0.6% to $2,378.06 an ounce