SYDNEY- Asian stocks were in a guarded mood on Tuesday as investors pondered fresh political uncertainty in European markets after right-wing gains in elections and a snap poll in France revived concerns about the cohesion of the bloc.
Moves were mostly modest, with MSCI’s broadest index of Asia-Pacific shares outside Japan dipping 0.5 percent in thin trade. Chinese blue chips fell 1.2 percent , having been shut on Monday, while the yuan hit a seven-month low.
Going the other way, Japan’s Nikkei firmed 0.3 percent and South Korea stocks rose 0.4 percent .
EUROSTOXX 50 futures also edged up 0.2 percent , steadying after Monday’s retreat, while FTSE futures were flat.
The euro, French stocks and government debt had been shaken after investors assessed whether the right wing can repeat their success in French elections and how much sway far-right parties can have on the new European Union executive.
Bond yields rose across Europe, with the spread between French and German debt widening notably, after an opinion poll suggested the far-right National Rally could win the snap election, albeit without a clear majority.
France’s opposition left-wing parties late on Monday pledged to work together and nominate joint candidates.
Elsewhere, markets gave a muted reaction to Apple’s long-awaited AI strategy, which integrates “Apple Intelligence” technology across a suite of apps. The iPhone maker’s shares were down 0.3 percent inafter hours trade, having slipped 1.9 percent in normal hours.
S&P 500 futures and Nasdaq futures both eased 0.1 percent in Asian trading, after edging higher on Monday.
The market has, so far, proven remarkably resilient to the jump in US yields that followed Friday’s jobs report and the pull back in expectations for Federal Reserve rate cuts.
“We see diminished prospects for easing this year, and now expect the first Fed cut only in November,” analysts at JPMorgan said.
“Equities seem to be ignoring the plethora of risks, including politics, geopolitics, the narrow market concentration and the surge in meme stock and crypto trading that may signal froth,” they added. “As such, we maintain a defensive tilt in our model portfolio.”
