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ASX shares to fall as UK, France elections weigh on investors
Joanne TranMarkets reporter
Updated Jun 30, 2024 – 8.40pm,first published at 5.25pm


The Australian sharemarket is poised to open lower on Monday as shareholders brace for elections in the United Kingdom and France, and prolonged global uncertainty.

The benchmark S&P/ASX 200 Index is set to fall 0.5 per cent or by 35 points to 7732.5 at the start of trade, tracking the S&P 500’s 0.4 per cent lower finish at 5460.48.

Australian investors will be among the first react to the first round of the French elections, scheduled to take place on Sunday (Monday AEST) and ahead of the UK election on Thursday (Friday AEST).

French markets initially slumped following the European Parliament elections in France as Marine Le Pen’s populist-right party National Rally gained a significant share of the vote. Equities and bond yields have since settled but the Bank of England recently warned that the French poll and its aftermath could trigger wider market volatility and financial instability.

Barclays, in a note to clients, said the outcome of the elections in the UK was “much less certain” than that in France, with its base case a 100-seat Labour majority.


“We would expect a focus on continued fiscal prudence and gradual movement towards closer alignment with the European Union,” economist Christian Keller wrote. Barclays added that it thought it would be positive for UK growth, continued disinflation and a cumulative 150 basis point of rate cuts by the BoE in between this August and August 2025.
Data coming this week

Locally, investors will be paying close attention to the Tuesday release of the Reserve Bank’s May policy minutes. RBA governor Michele Bullock said the board of the central bank discussed raising the interest rate at its last meeting.

“The June minutes will be scoured for hints as to how finely balance[d] that decision really was and how high the bar is for the RBA to come off the sidelines so late into a tightening cycle,” said National Australia Bank’s head of market economics Tapas Strickland.

May retail data and building approvals is also scheduled for release on Wednesday.

NAB has pencilled in a 0.2 per cent rise in retail sales in May, citing the figure to be consistent with the “recent trend of flattish growth in aggregate nominal spending and ongoing softness in overall consumption growth through the second quarter”.

RBA deputy governor Andrew Hauser cited retail sales among the list of indicators the central bank relied upon ahead of the August meeting, but NAB said the result would be “hard for it to swing the dial much, given it is only a partial indicator of consumption and can be volatile month to month”.
Commonwealth Bank and Westpac economists have pencilled in a 0.3 per cent rise in retail sales, in line with market expectations.

Meanwhile, the market expects building approvals to rise 1.7 per cent. That forecast is not in line with the projections of Westpac and NAB, who have predicted 1.5 per cent and 1 per cent increases respectively.
Westpac economists said the environment was still not “conducive for a sustained lift”, but that other indicators such as a jump in new home sales in Queensland and Victoria last month suggested there might be a “short-lived” uptick in May.

“While hard to justify, this effect could see a 1.5 per cent rise in monthly approvals, provided the volatile units component remains steady at weak levels,” they said.

Australia’s goods trade balance is set for release on Thursday, with NAB forecasting a $6 billion surplus in May. The bank cited volatility driven by swings in import values as part of the reason for the balance trending lower.

Westpac is more optimistic, projecting the goods trade balance to widen to $7 billion. The bank’s economists pointed to an improvement in coal and iron ore export volumes as commodity prices edged down slightly.

“Much of the unwind in imports looks to have materialised, giving scope for a slight lift in the surplus for May,” Westpac economists wrote in a report. “Modest strengthening in the Australian dollar will support this.”

In the US, there will be a shortened week with Wall Street closed for Independence Day on Thursday. Non-farm payrolls data will be released on Friday (Saturday AEST), where the early consensus is for slower but still robust payrolls growth and an unemployment rate staying at 4 per cent.