Markets and euro see French boost
French shares and the euro rallied as investors assumed centrist Emmanuel Macron will beat Marine Le Pen (pictured) in the May 7 run-off for the French presidency, removing the prospect of a Eurosceptic running the eurozone’s second-largest economy.
Relief swept through European markets.
“The extreme scenarios have evaporated,” said Philippe Ithurbide of Amundi, Europe’s largest asset manager.
He said the chance of Le Pen victory was now “close to zero” and attention was now on how Macron could win support for a reform agenda from France’s traditional political parties after the parliamentary election in June.
The European Commission president Jean-Claude Juncker has broken protocol to wish Macron well in the run off, as Brussels rallied against those seeking the bloc’s “destruction”.
Juncker congratulated Macron and wished him luck next month, tweeted Margaritis Schinas, a commission spokesman.
French government bonds had been selling poorly recently amid fears that anti-EU Le Pen or the far-left’s Jean-Luc Mélenchon could take control of the Élysée Palace.
“It turns out the polls were right,” said Bilal Hafeez, Nomura foreign exchange strategist.
Chris Beauchamp of IG said: “The FTSE 100 is ending the day in fine fettle, gaining over 150 points and looking set to finish near the highs of the session. In Europe the picture is even rosier, with stock markets putting in a solid performance. This might seem a bit overdone, given Macron was always supposed to win the first round, and there is still a second round to go.
“Only in two weeks’ time will be able to put thoughts of a Le Pen presidency behind us. However, investors seem buoyed by the consistent record of French polling, one that was reinforced by the result yesterday, and are prepared to move back into risk assets once more.
“Of course, this hasn’t solved all the other problems, such as North Korea, Syria and the Trump administration’s failure to produce any major reforms but for now the bears have been forced to get out of the way or risk being trampled in the rush to buy stocks again.”
The Paris stock market led a rally for European equities, with the benchmark CAC 40 rising more than 4 per cent as bank shares rose by nearly 10 per cent.
Picture credit: Wikimedia