Asian stocks flat, euro slides on French election concerns

Pedestrians are reflected in a stock market indicator board in Tokyo, Japan.
Pedestrians are reflected in a stock market indicator board in Tokyo, Japan. PHOTO: EPA

SINGAPORE (REUTERS) - Asian stocks were listless early on Tuesday (March 7) after Wall Street slipped on concerns about US President Donald Trump's ability to focus on economic policies, while the euro slid on fears an anti-European Union candidate may be elected France's next president.

MSCI's broadest index of Asia-Pacific shares outside Japan was flat, retaining most of its 0.36 per cent gain from Monday.

Japan's Nikkei fell more than 0.1 per cent, driven lower by demand for the safe haven yen.

Australian shares were up 0.2 per cent, ahead of the central bank's policy meeting later in the session when it is expected to keep interest rates on hold.

On Monday, US stocks posted losses of as much as 0.37 per cent after Trump signed a revised executive order, effective March 16, banning citizens from six Muslim-majority countries from traveling to the United States for 90 days.

The new ban, coming after his first attempt was blocked in the courts, removes Iraq from the list and applies only to new visa applicants.

Trump's allegations over the weekend that he was wiretapped by his predecessor Barack Obama, without offering any evidence, have also raised concerns about his ability to focus on his promised economic measures, including tax cuts and a boost to infrastructure spending.

"While we don't pretend to know how (political) events will play out in the coming weeks and months, we suspect that they will continue to dominate the headlines, affecting investors'appetite for risk," Oliver Jones, assistant economist at Capital Economics, wrote in a note. "Nonetheless, economic fundamentals have typically mattered more for equity prices. And we assume that this will remain the case."

European stocks also posted losses, with Deutsche Bank's 7.9 per cent loss the biggest drag on the FTSEurofirst 300 index after the German lender unveiled an 8 billion euro cash call as part of a major reorganization.

But European losses were limited by a deal by French carmaker PSA Group to buy Opel from General Motors in a 2.2 billion-euro deal.

An agreement on the terms of a planned 11 billion pound tie-up between Aberdeen and Standard Life also helped stocks.

The dollar index, which tracks the greenback against a basket of trade-weighted peers, inched higher to 101.70 early on Tuesday, adding to Monday's 0.1 per cent gain.

The euro was flat at US$1.05795, following a 0.4 per cent slide on Monday after former French Prime Minister Alain Juppe ruled out standing in the country's presidential elections. Weakness in the single currency underpinned the dollar index.

A poll on Friday showed that if Juppe replaced the scandal-hit Francois Fillon as the center-right candidate, he would likely win the election's first round, with centrist candidate Emmanuel Macron coming second - a scenario that would knock anti-EU candidate Marine Le Pen out of the race.

The US dollar was lower against the safe haven yen, holding at 113.88, after Monday's 0.1 per cent loss.

The Australian dollar advanced 0.16 per cent to US$0.7595.

In commodities, US oil pulled back almost 0.1 per cent to US$53.16 a barrel, extending Monday's 0.2 per cent drop, on ongoing concerns that US production growth may undermine output cuts by the Organization of Petroleum Exporting Countries.