Euro Drops to 3-Month Low After Greek, French Elections
Euro Weakens as S&P 500 Futures Fall; Treasuries Advance
S&P 500 Futures Fall as Europe's Voters Reject Austerity
Greek Election Gridlock Raises Risk for Bailout, Euro Future
Asia Stocks Fall Most in 6 Mths as French Elect Socialist
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May 7 (Bloomberg) -- The euro slid for a sixth day against the dollar and U.S. stocks fell, while Treasuries gained, after French Socialist Francois Hollande was elected president and Greek voters picked anti-bailout parties. European stocks erased earlier losses as German factory orders topped estimates.
The euro weakened 0.3 percent to $1.3059 as of 9:30 a.m. in New York. The Standard & Poor's 500 Index fell 0.3 percent. Ten- year Treasury yields decreased one basis point to 1.87 percent after losing as much as six points earlier. Ten-year French yields slipped three points to 2.79 percent. The Stoxx Europe 600 Index erased a 0.8 percent drop to climb 0.3 percent, even as Greece's ASE Index plunged as much as 8.3 percent in its worst drop since 2008. The S&P GSCI Index of raw materials fell for a fourth day.
Hollande, the first Socialist in 17 years to control Europe's second-biggest economy, pledged to push for less austerity. His platform calls for policies German Chancellor Angela Merkel opposes, including increased spending and a delayed deficit-reduction effort. The Greek parliament will have three new anti-bailout parties represented. German factory orders jumped 2.2 percent in March. Economists surveyed by Bloomberg News forecast an increase of 0.5 percent.
"Incumbents took a beating across Europe this weekend in what has been widely interpreted as a backlash against austerity," Michala Marcussen, global head of economics at Societe Generale SA in Paris, wrote in a report today. "Failure to secure a political majority to meet the terms of the second Greek program could see the country inch towards euro exit. This would in our opinion be seen as a negative event, even beyond Greece's borders."
Euro Weakens
The shared European currency weakened against all 16 major peers except for the South Korean won. The euro dipped below $1.30 for the first time since April 16, and slid 0.4 percent versus the pound. The Dollar Index, which tracks the U.S. currency against those of six trading partners, advanced 0.2 percent, rising for a sixth day in the longest streak since September.
In other European elections, Merkel's party had its worst election result in more than half a century in the state of Schleswig-Holstein. Austerity measures aimed at stemming Europe's turmoil have driven economies from the Netherlands to Spain back into recession, emboldening politicians campaigning for growth.
Fourth Straight Drop
U.S. stocks retreated for a fourth straight day. The S&P 500 tumbled 2.4 percent last week, its biggest drop of the year, as data on American and European labor markets boosted concern the global economy is weakening. The benchmark gauge of U.S. stocks retreated 3.5 percent from an almost four-year high on April 2 through the end of last week amid concern global economic growth was weakening.
Morgan Stanley and Bank of America Corp. paced losses in financial companies today. American International Group Inc. dropped as the U.S. Treasury Department agreed to sell $5 billion of shares, with the bailed-out insurer buying $2 billion of the total.
Risk perceptions among U.S. equity and credit investors are diverging by the most since 2009 as signs of an economic slowdown spur bigger increases in prices to protect against losses in bonds than stocks. The VIX, the benchmark gauge of U.S. equity derivatives that usually rises when shares fall, closed last week at 0.032 times the level of the Markit CDX North America High Yield Index, which increases when confidence in debt issuers deteriorates, according to data compiled by Bloomberg. That's near the 2 1/2-year low of 0.027 times reached in March.
Among European stocks, National Bank of Greece SA plummeted 13 percent. Roche Holding AG fell 3.6 percent, the most in two months on an intraday basis, after abandoning development of an experimental cholesterol drug. CSM NV, the world's biggest maker of bakery ingredients, jumped 13 percent after saying it will sell its U.S. and European bakery-supply units.
--With assistance from Masaki Kondo in Singapore, Rita Nazareth and Nikolaj Gammeltoft in New York, John Buckley and Cecile Vannucci in Amsterdam and Andrew Rummer, Daniel Tilles, John Deane and Stephen Kirkland in London. Editor: Paul Armstrong
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net; Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net
