To read the full version of this content please select one of the options below:

Investors rotate into Europe ahead of French run-off

Wednesday, May 3, 2017

Significance

Optimism that the centrist candidate and frontrunner, Emmanuel Macron, will win the French presidential election run-off on May 7 is contributing to inflows into European stock markets at a time when sentiment towards US equities is cooling. The euro has risen against the dollar to its highest level since the US presidential election. Investors are focusing on euro-area activity -- first-quarter euro-area GDP outgrew the United States, while manufacturing and services purchasing managers' surveys are at a six-year high.

Impacts

  • Bond markets remain sceptical about faster US growth and inflation -- the ten-year US Treasury yield has fallen since mid-March.
  • Oil prices have fallen by nearly 10% since April 11, owing to concerns about the credibility of OPEC's cuts and a persistent supply glut.
  • Sentiment towards China is starting to worsen because of credit-tightening measures and more regulatory scrutiny of financial instruments.
  • The only way Le Pen could become president would be if turnout among Macron's supporters was sharply lower than among her voters.
Expert Briefings Powered by Oxford Analytica
Stay up to date
Sign up to the Expert Daily Briefings email alert and receive up-to-the-minute analysis of global events as they happen.
*If your university does not have access to Expert Briefings, visit our information page to find out more.