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Stock Markets Rally In Wake Of Sunday's French Presidential Voting
Topic Started: Apr 24 2017, 10:17 AM (73 Views)
Webster
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(The Guardian) French stock market surges
--The French stock market has surged this morning, as investors welcome last night’s election results, writes my colleague Graeme Wearden.

The CAC 40, which contains the largest French companies, jumped by 4% at the start of trading to its highest level since April 2015. Bank shares are leading the rally, as fears of another eurozone crisis abate.

The euro, which hit a five-month high last night, is up around 1% this morning at $1.086.

Investors are relieved that Emmanuel Macron has qualified for the run-off on May 7th, where he is widely expected to win.

John Wyn-Evans, head of investment strategy at Investec Wealth & Investment, says Macron vs Le Pen was the market’s “preferred outcome”.

“Macron’s policies cleverly appeal to both sides of the political spectrum, and they are succinctly described by the Financial Times as a “business-friendly agenda coupled with Nordic-style welfarism”, encompassing, for example, labour market deregulation, lower corporation tax, and no social security contributions for those on the minimum wage,” Wyn-Evans explains.
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Webster
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(The Guardian) Markets cheers French election
--A wave of relief is sweeping through the markets this morning, pushing the euro up and triggering a wave of buying.

The first round of the French election delivered the result that most investors were hoping for, calming fears that the eurozone faced another threat to its existence.

In a massive snub to the established parties, the presidency will be contested between centrist Emmanuel Macron and National Front leader Marine Le Pen. And there’s a widespread expectation that Macron is ready to march into the Élysée Palace.

The euro spiked to a five-month high over $1.09 when the polls closed last night, and forecasters correctly predicted that Macron had won first place.

Most of the defeated candidates have already thrown their support behind Macron, and he is heavily odd-on to become the next French president.

If you missed last night’s excitement, let (teh Guardian's) Paris correspondent Angelique Chrisafis explain: The independent centrist Emmanuel Macron has topped the first round of the French presidential election and according to projections will face the far-right Front National’s Marine Le Pen in a standoff marked by anti-establishment angerthat knocked France’s traditional political parties out of the race.

Macron topped Sunday’s first round with 23.9% of votes, slightly ahead of Le Pen with 21.4%, according to near-final results from the interior ministry. Macron, 39, a political novice, now becomes the favourite to be elected as France’s next president. He is the youngest ever French presidential hopeful and has never run for election before.

After the UK’s vote to leave the European Union and the US vote for the political novice Donald Trump as president, the French presidential race is the latest election to shake up establishment politics by kicking out the figures that stood for the status quo.
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Webster
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....catching up on the day's events....

(The Guardian) France’s stock market is tipped to rocket this morning, quite possibly by more than 4%.

That’s because the ‘nightmare scenario’ of Marine Le Pen becoming French president appears to have been squashed, says Neil Wilson of ETX Capital: With pollsters and analysts giving the FN candidate virtually no chance in the second round against Macron, those really big worries that many had coming into this election - the risk of ‘Frexit’ and a breakup of the Eurozone - have definitely subsided. But they have not vanished.
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Webster
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--European stocks set to surge (Guy Johnson, Bloomberg TV - 24 April 2017)
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Webster
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(The Guardian) French Bonds Surge
--France’s government bonds are rallying hard in early trading, in another sign of relief about last night’s election results.

This means the gap between French and German borrowing costs has narrowed sharply, showing that investors are more confident about lending to Paris.

That’s because the threat of France leaving the euro has now waned, given Macron’s pro-European credentials.
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--France 10y risk spread over Germany known as 'Le spread' crashes below 50bps as Frexit risk has faded following French presidential election (Holger Zschaepitz, Deutche Welle - 24 April 2017)
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(The Guardian) French stock market hits two-year high
--Shares are rallying across Europe at the start of trading, as traders react to last night’s French election.

In Paris the CAC 40 has jumped by 4% to its highest level since April 2015. Bank shares are leading the rally, with Societe Generale, Credit Agricole and BNP Paribas up by around 10% each.

Mike van Dulken of Accendo Markets says traders are cheering the news that Macron and Le Pen have progressed to the second round run-off of the French presidential election, adding: The assumption is that centrist Macron is victorious in a fortnight’s time, picking up supporters of Fillon, Hamon and Mélenchon.
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Webster
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--European markets cheer French vote:
- CAC40 opens up 4.2% in Paris
- DAX is up 2%
- S&P 500 futures are up 1%
- Euro up 1.1% against dollar
(Georgi Kanchtev, Wall Street Journal - 24 April 2017)
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Webster
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(The Guardian) The Macron relief rally is also driving shares up in London.

The FTSE 100 has jumped by 130 points, or 1.75%, in early trading to 7238 points.

Financial stocks are (unsurprisingly) driving the rally, with Barclays up 4%, Royal Bank of Scotland gaining 3%.
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(The Guardian) BlackRock: Don't rule out a French surprise
--Analysts at investment group BlackRock have warned investors not to get carried away ahead of the second round of voting, in two weekend’s time.

They say: Business-friendly and pro-European Macron, who has maintained a large winning margin in head-tohead polls with Le Pen, can now build on his momentum.

Other candidates on both the left and right said they would vote for Macron while issuing strong statements against the National Front. We see markets pricing in some remaining political risk, given the potential for surprises in the next two weeks. Any significant shift toward Le Pen in the polls could dampen investor sentiment due to her anti-euro stance.


But right now (3:43am US/9:43am France), the CAC 40 index of leading French shares is sitting proudly at a two-year high.
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(The Guardian) - 9:59am France
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Webster
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(The Guardian) Emmanuel Macron vs Marine Le Pen was the market’s preferred outcome, says John Wyn-Evans of Investec Wealth & Investment.

Like most City experts, Wyn-Evans also expects Macron to win on May 7th.

His policies cleverly appeal to both sides of the political spectrum, and they are succinctly described by the Financial Times as a “business-friendly agenda coupled with Nordic-style welfarism”, encompassing, for example, labour market deregulation, lower corporation tax, and no social security contributions for those on the minimum wage.

He is also a strong supporter of the European Union, although a full exposition of his EU policies might have to wait until we know who wins the German election later this year.
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Webster
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(The Guardian) Anna Stupnytska, global economist at Fidelity International, says investors - and policymakers - should be remain cautious until the presidential run-off is over: “Markets will be buoyed by the positive outcome of the French election last night, with the centrist Emmanuel Macron going on to face the far right Marine Le Pen. This is not just because Macron is likely to win. Concerns over polling reliability and the turnout rate have been allayed after Sunday’s strong figures and markets reacted positively to the result in Asian trading this morning, with the euro up against the US dollar and Japanese yen and French bonds performing well.

“However, Le Pen could still potentially win the second round. It is probably too early for markets to see a big relief rally just yet or indeed, for the ECB to send any signals on tapering its bond purchase programme this week. The focus now will be on whether Le Pen changes her anti-EU messages in the next few days, with the Le Pen-Macron debate scheduled for 3 May.”
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--Apr #German #Ifo business climate index best since Jul 2011 as jump in current conditions climate to 69-month high outweigh expectations dip (Howard Archer, IHK Markit - 24 April 2017)
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(The Guardian) ABN Amro: President Macron would face obstacles
--Emmanuel Macron faces a serious challenge to revitalise the French economy, assuming he becomes the next president.

One potential hurdle is that his En Marche! party probably won’t win a majority in June’s legislative elections.

That means Macron would have to build alliances in the French assembly to actually get things done.

Analysts at ABN AMRO have warned their clients that Macon could face “major obstacles”.

They say: Even presidents with the best intentions have struggled to pass reforms in France. They have been blocked by vested interests, street protests and strikes in the past. Macron could also face the obstacle of not having a parliamentary majority.

Under France’s semi-presidential political system, if a president’s party is different to that of the majority of members in parliament, the government is divided – this is called “cohabitation”. Such a scenario seems likely in the event of a Le Pen, but also a Macron victory.

When this happens, the President can become a marginal figure in national politics. In 1998, for example, the Socialist government of PM Lionel Jospin used its parliamentary majority to pass legislation shortening the work week from 39 to 35 hours, against the wishes of the centre-right President Chirac.
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