U.S. stock futures fell, following the biggest weekly slump in 2012, after Francois Hollande’s election as France’s president and Greek voters flocking to anti-bailout parties spurred concern about Europe’s debt crisis.
Standard & Poor’s 500 Index futures expiring in June dropped 1 percent to 1,348.90 at 7:25 a.m. Tokyo time. The benchmark index for American equities retreated 2.4 percent last week. The euro declined, slipping to the weakest level since November 2008 against the British pound.
“People would better buckle up,” Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor Inc. in Cincinnati, said in a telephone interview. “There are still many hurdles in Europe, there are no easy answers and the electorate is rejecting austerity. People will take a renewed focus on Europe and that focus is not positive.”
Socialist Hollande got about 52 percent against about 48 percent for Nicolas Sarkozy, according to estimates by four pollsters. Hollande’s platform calls for policies German Chancellor Angela Merkel opposes, including higher taxes, increased spending and a delayed deficit-reduction effort. He has also advocated a more aggressive European Central Bank role. Greece’s poll casts doubt on whether the two main parties can put together a government strong enough to implement spending cuts to ensure the flow of bailout funds.
Merkel’s party had its worst result in more than half a century in the northern German state of Schleswig-Holstein after an election that put the Social Democrats within reach of forming a coalition.
A reduction in austerity could put more pressure on the ECB to act, according to David R. Kotok, Cumberland Advisors’s chairman and chief investment officer.
‘More Monetary Ease’
“Political momentum moves toward more monetary ease,” Kotok wrote in a note to clients. “We expect some form of balance sheet expansion before the end of this year. We expect credit spreads of weaker sovereigns to widen until the ECB enters the market or discusses that it may do so.”
The S&P 500 (SPX) dropped the most since December last week as a report showed U.S. employers added fewer jobs than forecast and Spain entered a recession. The gauge was still up 8.9 percent in 2012 on better-than-estimated earnings. About 70 percent of S&P 500companies that reported results since the start of the earnings season have topped projections, according to data compiled by Bloomberg.