Asian shares slide after French election

Market reaction to European elections
Market reaction to European elections

    JUST WATCHED

    Market reaction to European elections

MUST WATCH

Market reaction to European elections 04:50

Story highlights

  • Election of Hollande as French president raises concerns about Europe's debt crisis
  • By mid-morning in Hong Kong every major Asian stock market in the red

Asian equities fell after U.S. jobs data disappointed and the election of François Hollande as French president raised concerns about Europe's debt crisis.

By mid-morning in Hong Kong, the FTSE Asia ex-Japan index was down 1.8%, with every major Asian stock market in the red.

The Hang Seng was down 2.5%, the Kospi was off 1.6%, and the Nikkei was 2.5% lower. Australia's S&P/ASX 200 index had dropped 1.5%, and the Shanghai Composite had inched down 0.2%.

U.S., Japanese and Australian bonds rose as investors sought the safest assets. U.S. 10-year yields, which move inversely to prices, fell four basis points to 1.84% by mid-morning in Tokyo, according to Bloomberg.

The euro fell 0.8% against the US dollar to $1.2976.

The challenges that Hollande will face
The challenges that Hollande will face

    JUST WATCHED

    The challenges that Hollande will face

MUST WATCH

The challenges that Hollande will face 03:11
Sarkozy loses presidency to Hollande
France's incumbent President Nicolas Sarkozy casts his vote in the presidential runoff election on May 6, 2012 in Paris.

    JUST WATCHED

    Sarkozy loses presidency to Hollande

MUST WATCH

Sarkozy loses presidency to Hollande 01:47
Market reaction to European elections
Market reaction to European elections

    JUST WATCHED

    Hollande: I've heard call for change

MUST WATCH

Hollande: I've heard call for change 05:11
Europe's elections: Lesson for the U.S.?
A woman casts her vote for Greece's general elections in Athens on May 6, 2012.

    JUST WATCHED

    Europe's elections: Lesson for the U.S.?

MUST WATCH

Europe's elections: Lesson for the U.S.? 01:25

Hollande swept to victory in France's presidential election, ousting incumbent Nicolas Sarkozy who had played a key role in structuring bailout schemes for indebted eurozone members and pushed for strict fiscal policies aimed at managing huge debts.

Investors are worried that the election of Hollande will hamper Europe's attempts to cut swollen government deficits, raising the stakes in the eurozone debt crisis. The 57-year-old Socialist leader said his election signaled a hope for Europe that "austerity does not have to be inevitable."

On Friday, U.S. and European markets fell sharply after data showed the world's largest economy was creating fewer jobs than expected.

"The weaker-than-expected U.S. employment data and the result of French presidential election are likely to add to pressure on risky assets today," Singapore-based analysts at Barclays said in a note.

Exporters took a hit in Japan as the yen gained 0.15% against the US dollar to Y79.78. Honda Motor plunged 5.1%, Toyota Motor dropped 3.1% and Sony slid 3.5%. Canon, which generates one-third of its sales from Europe, fell 1.7%.

Clothing giant Fast Retailing shed 3.1% after same-store sales at its Uniqlo chain fell 6.8% in April from a year earlier. But there were some bright spots with Aiful Corp, a financial services provider, up 2.9% after posting an operating profit of Y16bn for the year ended March 31. Foster Electric, which supplies earphones for Apple's iPhones and iPads, surged 9.9% after forecasting its operating profit to jump by 230% to Y6bn.

In Seoul, shipbuilders were among the loss leaders with Hyundai Heavy Industries off 2.8%, Daewoo Shipbuilding Marine Engineering down 4.3%, and Samsung Heavy Industries 5.1% lower.

Samsung Electronics lost 1.8% after Apple won sanctions against the South Korean company for its failure to produce source code in a patent-infringement lawsuit in California.

Resources stocks lost ground on concerns about global growth and recent weakness in crude prices. Rio Tinto sank 3.6% and its bigger rival BHP Billiton dropped 2.9%. In Hong Kong, Cnooc tumbled 3.5% and PetroChina fell 2.7% while Jiangxi Copper, China's biggest producer of the metal by sales, lost 1.1% in Shanghai and Huludao Zinc, the country's second-largest zinc producer by sales, fell 3.8%. In Tokyo, Pacific Metals sank 6.1%, and steelmaker JFE Holdings slumped 4.5%.

Financial shares were under pressure amid renewed concerns about Europe's debt problems. In Hong Kong, London-based HSBC Holdings slid 2.4%, while Bank of Communications and China Citic Bank each lost 2.2%.

Insurers were hit, with Ping An Insurance Group and AIA Group off 2.7% each. In Shanghai, China Life Insurance was off 0.6% and New China Life down 0.7%. In Tokyo, Nomura Holdings tumbled 6.6% and Mitsubishi UFJ Financial Group slid 3.4%.