Asian Stocks Expected to Drop Amid Global Market Downturn

Asian stock markets are bracing for a tumble in early trading, owing to the growing concern over France's political crisis which is escalating anxiety across global markets. This week will also witness several central bank decisions which could potentially signal delays to the long-awaited easing cycle. 

Equity futures in Australia, Japan and Hong Kong suggest opening losses after the S&P 500 reported a slight decrease on Friday. Benchmark 10-year Treasuries experienced an increase while gold rallied. US contracts remained relatively unchanged during early trading. 

The inclination towards haven assets came as risk sentiment turned negative. A measure of global stocks suffered its biggest two-week drop due to repercussions from France's snap parliamentary election threatening spillage into the European Union (EU). The greenback reached its highest since November while last week saw the euro fall substantially; concurrently, French and German bond spreads widened at record levels. 

According to Chris Weston, head of research at Pepperstone Group based out of Melbourne, traders are being guided by perceived risk through aggressive widening yield premium seen in French 10-year bond yield over their German counterparts. He further added that "the evolving theme in French politics continues to see market players attempting to price risk and uncertainty around future French fiscal position." 

A left-wing coalition presented a manifesto intending on dissecting most of Macron’s seven years worth of economic reforms, putting France on a potential collision course with the EU regarding fiscal policy. Traders will be keenly monitoring European bond futures upon opening in Asia following far-right leader Marine Le Pen's declaration that she has no plans of ousting President Emmanuel Macron if victorious in France’s snap parliamentary election - an attempt at appealing moderates and investors alike. 

Following Federal Reserve’s recent reduction projections for US monetary easing this year, policymakers from UK and Australia may indicate their lack of conviction about disinflation enough to commence lowering borrowing costs themselves later this week. 

In US market news, stocks struggled gaining traction after consumer sentiment fell significantly due to high prices adversely affecting personal finance views. The S&P 500 closed slightly lower, primarily due to a dip in industrial shares; however, Tech outperformed with Adobe Inc. reporting a 15% increase based on strong outlooks. 

The Stoxx Europe 600 slid by 1%, while France's CAC 40 Index losses exceeded over 6% last week - the highest since March of this year. 

Treasury yields for ten years declined two basis points at 4.22%. Federal Reserve Bank of Minneapolis President Neel Kashkari expressed that the central bank can afford to wait and watch incoming data before initiating interest rate cuts – an opinion also shared by Cleveland Fed President Loretta Mester who perceives inflation risks as skewed towards upside. 

In commodities news, oil settled above $78 per barrel while gold rose by almost two percent amid haven demand. 

This upcoming week will see traders keeping an eye on inflation readings in UK and Europe assisting bets regarding global rate outlooks. Meanwhile, several Federal Reserve officials including Dallas Fed President Lorie Logan, Chicago Fed President Austan Goolsbee and Fed Governor Adriana Kugler are scheduled to speak.