European politics may have some influence on early Asian trading on Monday – France was on course for a hung parliament in Sunday’s election, with a leftist alliance unexpectedly taking top spot ahead of the far right in a major upset that was set to bar the far right, eurosceptic National Rally party from running the government.
Asia opens in good shape. Japan’s Nikkei 225 index scraped a new record high of 41,100 points on Friday and has risen some 7% in just two weeks, and the MSCI Emerging Market and MSCI Asia ex-Japan indices are at their highest in two years.
More broadly, the MSCI World, S&P 500, and Nasdaq all hit record highs last week, and last month euro zone stocks hit a 23-year high. Britain’s FTSE 100 hit a record high in May.
Monday’s Asia and Pacific calendar is light, with the spotlight on bank lending, trade and current account, and overtime pay figures from Japan. Philippines central bank governor Eli Remolona and finance secretary Ralph Recto speak at a business forum on Monday too.
Japan’s overtime pay isn’t usually seen as a top-tier indicator, but it is worth watching this month.
A recent labor union survey showed that firms offered to hike pay by 5.1% on average this year, the biggest increase in 33 years and far outpacing inflation now hovering around 2%. But figures on Friday showed that household spending plunged in May as higher prices continued to squeeze consumers’ purchasing power.
This is a headache for Bank of Japan policymakers who want to raise interest rates and have put great store on rising wages, but are worried about the impact on an economy that’s far from firing on all cylinders.
