Stock market today: Asian stocks mostly fall, Euro drop on French election outcome

HONG KONG -- Asian stocks mostly fell Monday, with the Euro dropping on the shock French election outcome, while U.S. stocks rose to more records Friday boosted by a highly anticipated report on the job market.

U.S. futures and oil prices decline.

The euro climbed above $1.08, while the gains were tempered by the surprising results of the French parliamentary elections.

The left-wing New Popular Front has won the most seats in the 2024 French legislative election, beating back a far-right surge but failing to win a majority. The result leaves France facing the stunning prospect of a hung parliament and worries of political and policy uncertainty.

The currency fell to $1.0829 from $1.0836 in morning trading.

In Tokyo, the Nikkei 225 index was up 0.2% to 40,999.80 despite official data showing the real wages fell 1.4% year on year in May, a decline for the 26th straight month as the weakening yen and higher commodity costs pushed up the cost of imports. While the nominal wages rose 1.9%.

Hong Kong’s Hang Seng index declined 1.3% to 17,571.31 and the Shanghai Composite index was down 0.6% to 2,933.44.

Australia’s S&P/ASX 200 sank 0.4% to 7,790.80 while South Korea’s Kospi edged less than 0.1% lower to 2,861.92.

On Friday, the S&P 500 climbed 0.5% to 5,567.19, setting an all-time high for a third straight day following Thursday’s pause in trading for the Fourth of July holiday. The index has already set 34 records and climbed close to 17% this year, which is only a little more than halfway done.

The Dow Jones Industrial Average rose 0.2% to 39,375.87, while the Nasdaq composite added 0.9% to 18,352.76.

The action was more decisive in the bond market, where Treasury yields sank following the U.S. jobs report. Employers hired more workers last month than economists expected, but the number was still a slowdown from May’s hiring. Plus, the unemployment rate unexpectedly ticked higher, growth for workers’ wages slowed and the U.S. government said hiring in earlier months was lower than previously indicated.

Altogether, the data reinforced belief on Wall Street that the U.S. economy’s growth is slowing under the weight of high interest rates. That’s precisely what investors want to see, because a slowdown would keep a lid on inflation and could push the Federal Reserve to begin cutting its main interest rate from the highest level in two decades.

The question is whether the economy can remain in this Goldilocks state of not too hot and not too cold, while the Federal Reserve times its next moves precisely. The hope is that the Fed will lower interest rates early and significantly enough to keep the economic slowdown from sliding into a recession, but not so much that it allows inflation to regain strength and take off again.

The clearest takeaway from the jobs report for financial markets was that it keeps the Fed on track to cut its main interest rate later this year, likely in September and perhaps again in December. The two-year Treasury yield, which closely tracks expectations for Fed action, fell to 4.60% from 4.71% late Wednesday.

The yield on the 10-year Treasury, which is the centerpiece of the bond market, fell to 4.27% from 4.36% late Wednesday and from 4.70% in April. That’s a notable move for the bond market and offers support for stock prices.

In other dealings Monday, U.S. benchmark crude oil gave up 20 cents to $82.96 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, declined 7 cents to $86.47 per barrel.

The U.S. dollar rose to 160.96 Japanese yen from 160.72 yen.