European and US markets experienced a risk-off sentiment on May 6, 2025, following political and economic developments. Germany's conservative leader Friedrich Merz failed to secure the chancellorship in the first round of voting in the German Parliament, leading to a notable decline in German stocks. Frankfurt's DAX index dropped about 2% before partially recovering but still underperformed other European peers. This political setback for Merz caused a 1.4% loss on the Frankfurt Stock Exchange. Meanwhile, the Hong Kong Monetary Authority (HKMA) announced it is diversifying its portfolio by reducing US Treasury holdings and increasing investments in non-US assets, which contributed to negative sentiment in US stock futures. The S&P 500 futures fell 0.7%, and Nasdaq futures declined 1.0%. In currency markets, the Japanese yen was the best-performing G10 currency amid trade optimism, while the US dollar weakened against most major currencies ahead of US ISM Services data. The Swiss franc showed strength despite zero inflation, whereas the Australian dollar and New Zealand dollar remained firm, supported by a rally in the Asia-Pacific region and Australia's Labor Party election victory. The euro was boosted by improved Sentix economic sentiment data. The Swiss franc was the weakest G10 currency, impacted by the country’s zero inflation rate. Taiwan's central bank denied allegations of foreign exchange manipulation amid a strong Taiwan dollar surge, the largest since the 1980s.