Monday, 24 April: We start naturally with latest standpoint on the French presidential election; Sunday saw the conclusion to the first round of voting which saw Centrist Emmanuel Macron and far-right leader Marine Le Pen progress to the second round. This is the first time in sixty years that the main parties have failed to have a candidate in the second round, with the political newcomer Macron favourite to become the next President, which will be decided on the 7 May. Early polls predict the En Marche! Leader Macron will win at least 61% of votes in next month’s decisive vote.
Macron secured 23.8% of votes in the first round whilst Le Pen took 21.5%. Mr Macron worked formerly as a banker and was economy minister under Hollande before breaking away to form his own party; En Marche! Whom promotes a liberal pro-EU agenda. Le Pen on the other hand wants to renegotiate France’s relationship with Brussels and hold a referendum, enter into the frame Frexit…..Original. All in all Le Pen is less favoured in the market’s eye, as she has pledged to ditch the euro as part of an anti-establishment upheaval. Despite the tragic terrorist attack just before the first round voting began, which plays into Le Pen’s policies and campaign themes, Macron has emerged a firm favourite, consolidated more after he looks to have picked up backing from the other parties who’s respective ‘races’ came to an end on Sunday.
Following on, markets surged from the news, and shortly after the open the CAC was up over 4%. The FTSE had risen over 1.5% and the euro had made significant gains versus other major currencies; + >1% against the USD and GBP. Banks were the standout sector (not exclusive to France), seeing the likelihood of Macron winning as a positive for financial institutions and the economy. Barclays and Standard Chartered shares rose over 4% during the day, with RBS, Lloyds and HSBC all modestly posting gains of c.2%.
At the close the FTSE was at 7264.68 +2.11%, down 1.39% vs the euro at 1.1782 and US stocks were seemingly riding the momentum, as we write the S&P sits 0.9% higher alongside the Dow Jones with similar gains. Barclays closed the day 5.41% higher, second to only Smurfit Kappa group; shares in the paper based packaging group seemingly boosted from lowered risk post French election Rd 1 and a recent buy rating from Goldman.
EY has released a report showing the number of profit warnings issued by publicly listed companies reached 75 in Q1, 2 higher than Q4 of 2016 but one less than the corresponding period from last year. Support Services was the sector that issued the most warnings with 11. Many of the associated risks and problems with the Brexit at the moment are being mitigated by those on the flip side enjoying export led growth and benefitting from the weakened value of sterling.