Far right makes significant gains in EU vote

Good morning. In today’s newsletter we’re covering:

But our top story comes from Europe: Far-right parties have made significant gains in the EU elections, performing well in Germany and comfortably winning the vote in France, prompting Emmanuel Macron to call a snap parliamentary election.

An initial projection by the European parliament suggested that far-right and hard-right groups were on course to hold almost a quarter of the seats when the body next sits, up from a fifth in 2019.

Macron stunned France with his decision, made after his centrist alliance was trounced by Marine Le Pen’s far-right movement in the European parliamentary vote.

“I’ve decided to give you back the choice,” Macron said in an address from the Elysée palace.

As well as delivering a stinging blow to the domestic standing of the French president and Olaf Scholz, the German chancellor, the gains are expected to help tilt the European parliament towards a more anti-immigration and anti-green stance.

Read more about the elections here — and visit our tracker for exit polls and preliminary results, updated continuously as more votes are counted.

• An insider’s account of the AfD: As Germany’s far-right celebrates a strong performance in European parliament elections, a former leader argues the party has lost its way.

• Europe Express: Today’s newsletter, publishing at 1pm HKT, will be free for all subscribers as Henry Foy breaks down the elections.

Here’s what else I’m keeping tabs on today:

• Economic data: Japan publishes revised first-quarter GDP figures. Malaysia reports labour force data, manufacturing sales and the industrial production index for April.

• Brics: Foreign ministers of the Brics group of nations begin a two-day meeting hosted by Russia’s Sergei Lavrov in the city of Nizhny Novgorod.

• Holiday: Financial markets are closed in China, Hong Kong and Taiwan for the Dragon Boat Festival.

Five more top stories

1. Narendra Modi has been sworn in as India’s prime minister for a historic but unexpectedly constrained third term. After a relatively weak election performance for his Bharatiya Janata party, the strongman leader will now depend on coalition allies, and he has already made unusually conciliatory comments about ruling through consensus.

2. Opposition politician Benny Gantz has resigned from Israel’s emergency government and called for early elections, accusing Prime Minister Benjamin Netanyahu of mishandling Israel’s war in Gaza. In a wide-ranging speech, Gantz also backed a US-led push to free the Israeli hostages still held in Gaza via a deal with Hamas, and supported a commission of inquiry into the failures surrounding October 7.

• More Israel-Hamas war news: Israel’s military freed four hostages in Gaza on Saturday after a daylight operation in Nuseirat in the centre of the enclave that local officials said killed and injured hundreds of Palestinians.

3. European buyers are seeking to reduce their dependence on China, sourcing executives say, as Brussels increases scrutiny of goods from the world’s largest export economy. Unlike US companies, which have aggressively sought new suppliers, Europeans are focused on reducing their dependence in specific areas where they believe they have become over-reliant on Chinese goods.

4. Exclusive: Donald Trump has lost some of his edge over Joe Biden on the economy in a monthly poll of American voters, one of the first signs that months of strong economic data may finally be boosting the president’s re-election prospects. Here are the results from the latest FT-Michigan Ross poll.

5. Iranian authorities have disqualified prominent moderates as candidates in the snap presidential election scheduled for later this month, narrowing the field to five hardline candidates and one mid-ranking reformist. The early polls follow the helicopter crash that claimed the life of Ebrahim Raisi, the country’s president.

News in-depth

One of the pack of Chinese AI hopefuls trying to take on the likes of OpenAI comes from an unusual source: a quant fund dominating the country’s financial sector. High-Flyer Capital Management has grown into a roughly Rmb60bn ($8bn) asset manager since its launch in 2015, partly using AI and algorithms to identify patterns or variables that could affect stock prices. Now it has parlayed that knowledge and infrastructure into a powerful AI model that experts say is on a par with leading western efforts.

We’re also reading . . . 

• Indian election: The setback to Narendra Modi’s high-handed style of rule can galvanise the economy and make the country a reliable partner, writes Raghuram Rajan, a former governor of India’s central bank.

• What to read: Three new books on China help bring definition to the still fuzzy but emerging contours of a new type of cold war.

• Working overseas: Some companies have found that the impact of the pandemic has intensified a reluctance to move abroad for work, writes Pilita Clark.

Chart of the day

Graphite has become the latest resource to cause trade tensions between the US and China, with Washington putting pressure on electric vehicle and battery makers to build a new non-Chinese supply chain for graphite anodes. The key material for EV batteries has been neglected by non-Chinese manufacturers, giving China almost 100 per cent of the market.

Take a break from the news

India’s cricket team narrowly beat arch-rivals Pakistan in a hotly anticipated World Cup clash on New York’s Long Island on Sunday, in front of a sellout crowd gathered to witness the first such fixture on American soil.