BLBG:Stocks Drop, Treasuries and Dollar Gain on Elections
Stocks (MXWD) fell, dragging the MSCI All- Country World index to a three-month low, while Treasuries and the dollar gained after French Socialist Francois Hollande was elected president and Greek voters picked anti-bailout parties. European stocks erased losses after German factory orders beat forecasts.
The MSCI All-Country World Index slid 0.7 percent as of 7:28 a.m. in New York, after losing as much as 1 percent. Greece’s ASE Index (ASE) plunged 8.3 percent, the most since October 2008, and Standard & Poor’s 500 Index futures fell 0.6 percent. The euro weakened 0.4 percent to $1.3038, U.S. 10-year Treasury yields fell three basis points, with similar-maturity French yields declining three basis points, reversing an earlier increase. The S&P GSCI Index of raw materials fell for a fourth day, and was close to giving up its gains this year.
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 new 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.”
Debt Crisis
Austerity measures aimed at stemming Europe’s turmoil have driven economies from the Netherlands to Spain back into recession, emboldening politicians campaigning for growth.
The Dollar Index, which tracks the U.S. currency against those of six trading partners, advanced 0.2 percent, rising in the longest run of increases since September. The euro depreciated to less than $1.30 for the first time since April 16, and slid 0.5 percent versus the pound. The yen strengthened against most of its 16 major peers.
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
