Macron emerges as France’s president
Market participants and analysts received welcome relief after the results of the second round of the French elections didn’t result in a surprise like the Brexit poll or the US election results.
Centrist candidate Emmanuel Macron emerged as a clear winner in the French presidential race, defeating far right candidate Marie Le Pen with 66% of the vote. The markets experienced a breather along with the members of the European Union and the European Central Bank (or ECB). The risk of a breaking up of the European Union (or EU) will subside for now, with Brexit being the only breakup that will require attention anytime soon.
Macron has an uphill battle
Despite the strong mandate Macron received from the French population, he faces the uphill battle of bringing in much-needed reforms. Reforms in taxation and the labor market are likely to be Macron’s key priorities, but with an unestablished party, he’s likely to face challenges in gaining legislative support.
The markets have reacted positively since the last opinion polls indicated a Macron win two days before the election’s results. Haven assets (GLD) (FXY) have started retracing the gains they saw in earlier weeks. The risk appetite in equity markets (SPY) also started improving after the election’s results were announced.
Going forward in this series, we’ll be talking more about market’s (ITOT) reaction to the French election’s results and how the ECB is likely to act now that Macron’s win has eliminated a major political uncertainty (VXX).