China drags on Asia shares, politics on euro, Mexican peso

A RENEWED SLIDE in Chinese shares and a sobering set of factory surveys sucked Asian markets lower on Monday, while the euro and the Mexican peso were both jolted by political developments at home. E-Mini futures for the S&P 500 followed with a loss of 0.5% and European bourses were seen opening down. Shanghai blue chips resumed their slide with a fall of 2.3% that soured sentiment across the region.

SYDNEY — A renewed slide in Chinese shares and a sobering set of factory surveys sucked Asian markets lower on Monday, while the euro and the Mexican peso were both jolted by political developments at home.

E- Mini futures for the S& P 500 followed with a loss of 0.50% and European bourses were seen opening down.

Shanghai blue chips resumed their slide with a fall of 2.3% that soured sentiment across the region. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.60%, adding to a 2% drop last week.

Japan’s Nikkei shed 2.2% to an 11-week low, with a survey of manufacturers showing sentiment had darkened a shade in the face of trade war threats.

The purchasing managers’ index still edged higher for June, but exports orders softened.

Tension is growing ahead of a July 6 deadline when the US is due to impose $ 34 billion of tariffs on Chinese exports.

“The key risk for the market isn’t that Trump actually implements his trade threats but rather that a protracted period of trade uncertainty begins to weigh on economic activity,” JPMorgan analysts said in a note. “The evidence suggesting this is happening is far from conclusive, but ominous data points are accumulating.”

Two surveys of Chinese manufacturing out in the last few days showed a softening in activity, partly due to softness in exports.

A slew of factory readings from across the globe were due on Monday, while the US ISM report is out on Tuesday. Minutes of the last Federal Reserve policy meeting come on Thursday and the week closes with US payrolls for June.

In currency markets, the euro took an early knock on reports German Interior Minister Horst Seehofer had rejected a migration deal German Chancellor Angela Merkel negotiated at a European Union summit on Friday last week.

The currency then partly bounced on news Mr. Seehofer had offered to step down as minister and as chair of his Christian Social Union party (CSU).

The move makes the future of Ms. Merkel’s government even more uncertain as her Christian Democrats party ( CDU) relies on the CSU to maintain power through a coalition formed three months ago to end a political vacuum.

After all that, the euro was 0.33% easier at $0.1642, having skidded as far as $1.1632 at one stage.

The US dollar gained 0.18% on a basket of currencies to 94.808, but was still below Friday’s top of 95.324. It was flat on the yen at 110.68 having been as high as 111.06 at one stage.

The Mexican peso see-sawed after leftist Andres Manuel Lopez Obrador won a decisive victory for president.

Dealers said the clear win might settle one source of political uncertainty, but Mr. Obrador was also expected to sharpen Mexican divisions with US President Donald Trump. —