US equity markets closed lower on Friday as investors in the States positioned themselves ahead of the weekend’s French election.
Accendo Markets Analyst, Mike van Dulken noted – “The Dow Jones closed 0.2% lower as Tech stocks bookended the index; Microsoft led all stocks while Verizon underperformed. Only two sectors (Utilities and Industrials) closed higher on the S&P500, while the Tech-focused Nasdaq was the top performing index, albeit closing 0.1% lower. Fresh talk of Trump tax hopes appear to have been tempered and the markets are still wary that aims will be elaborated on rather than actual policy progress. Markets are getting increasingly impatient for the latter, while the man himself concentrates on relationships with China and what to do with North Korea to keep us on our geopolitical toes.”
After all the talk of the first round of the French election going down to the wire, yesterday’s result was the one predicted for the last few months, with the independent Emmanuel Macron set to face-off with the Front National’s Marine Le Pen. Of the two, Macron is the favourite to become the next president, taking 23.9% of the vote to Le Pen’s 21.4% with 97% of the country reporting. Already the scandal-blighted Francois Fillon has urged his voters to back Macron, and one imagines a decent chunk of Jean-Luc Melenchon’s supporters will also plump for him over his far-right rival.
Spreadex Analyst, Connor Campbell commented – “Investors’ sighs of relief at the increased likelihood of avoiding a Le Pen presidency were more than evident after the bell. Understandably the CAC was the biggest winner, the French index surging a whopping 3.6% to hit a 2 year peak, while the DAX rose by 260 points.”
The Euro reacted positively to the news, jumping 1.4-1.5% against both the dollar and the pound.
ADS Securities suggested – “The Euro will remain centre stage this week with the European Central Bank meeting on Thursday expected to dominate the economic calendar for the next few days. The Single currency has been performing well against its peers as recent reports from the Euro area have shown continued improvements, but the stagnating inflation remains the key concern for the ECB that is expected to leave policy unchanged. Today the release of the German IFO report is expected to print in a steady to positive manner and this could be key for the Euro to hold on its gains after the French elections and it will be interesting to see how the currency will trade ahead of the ECB meeting.