GLOBAL MARKETS-Euro, kiwi slip on political uncertainties, Asia shares fall

GLOBAL MARKETS-Euro, kiwi slip on political uncertainties, Asia shares fall
From Reuters - September 24, 2017

TOKYO (Reuters) - The euro slipped on Monday after German Chancellor Angela Merkel won a fourth term but faced a fractured parliament as support for the far-right surged, while Asian shares pulled back, weighed by concerns about Chinas economy.

The New Zealand dollar also took a hit as the Pacific countrys ruling National Party won the largest number votes in a weekend election but failed to secure a ruling majority, with a protracted period of coalition building now a possibility.

The euro was down 0.2 percent at $1.1930, putting more distance between a 2-1/2-year high of $1.2092 reached on Sept. 8, when a European Central Bank policy meeting leftcurrency bulls optimistic the ECB would begin tapering its big stimulus programme.

MSCIs broadest index of Asia-Pacific shares outside Japan handed back earlier modest gains and was last down 0.35 percent with losses across the regions weighing.

Two years after Merkel left German borders open to more than 1 million migrants, the anti-immigration Alternative for Germany (AfD) stunned the establishment by becoming the first far-right party to enter parliament in more than half a century.

The market reacted by selling the euro on the possibility of Merkel running into difficulties in forging a coalition. The euro, however, was already losing support from the European Central Banks monetary policy theme and appeared to be on its way lower, said Daisuke Karakama, chief market economist at Mizuho Bank in Tokyo.

The election outcome in Germany showed the country was no longer a special presence in Europe amid growing support for populism and the far right.

In New Zealand, the kiwi, the world 11th most-traded currency, was down 1 percent at $0.7270. It was at a 1-1/2-month high of $0.7435 as recently as Sept. 20, when speculation for a comfortable ruling party win had boosted the currency.

While there are a few different scenarios and some potentially testy issues to negotiate, ultimately the political landscape appears as though it will remain relatively centralist and we are reasonably agnostic on what it all means, wrote economists at ANZ.

Chinese stocks remained shaky after falling towards the end of last week following the Federal Reserves hawkish policy stance and S&Ps downgrade of Chinas sovereign rating.


Continue reading at Reuters »