As widely expected by polls, Emmanuel Macron won the French Presidency with a clear advantage (65% over 35% for Marine Le Pen). Financial markets barely reacted and the single currency is still trading below $1.10. It is worth noting that the euro climbed anyway at 6-month high.
Regarding stocks markets, they were opening lower this morning as investors certainly took profit from the last two weeks’ increase. It seems that there is no relief rally. We believe that this relief rally already happened after the first round. Nonetheless, one may assume that the relief rally are coming from the bonds market where French yields are weakening.
Now, the tricky part is going to come. markets are still unsure if Macron will be able to govern as he needs the majority at the French parliament (the famous third round) which may be difficult to achieve. Indeed Macron’s party “En Marche !” is very young.
Last but not least, Macro mentioned in his speech that he will not give Britain an easy Brexit deal and this may weigh on the pound in the medium term. The British currency was by the way trading mixed this morning.
By Yann Quelenn