'Macron rally' pushes shares to record high
Experts divided on how sustainable the boost to market sentiment will prove to be
A market rally that set in following the victory for Emmanuel Macron in the first round of the French presidential election on Sunday is rolling on.
The Guardian says the MSCI All World index, a main global stocks benchmark, hit an all-time high for the second consecutive trading session, taking it above 1,871.
In Europe the euro hit a five-month high on Sunday and was heading back to that level this morning, taking it to £0.85 against the pound.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Elsewhere on European stock markets, the French Cac-40 hit a nine-year high after rising four per cent - and this morning it was edging higher again on 5,274. In Germany the Dax rose above 12,500 for the first time ever.
Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, told the BBC the upward move was "a classic relief rally".
In short, markets were worried that the first round election might result in a run-off between the far-right Marine Le Pen and hard-left Jean-Luc Melenchon, both of whom are staunchly protectionist and anti-EU.
Instead the pro-EU centrist Emmanuel Macron won the vote - and while Le Pen did progress, Macron is widely expected to win the second round handsomely.
For some experts this, combined with the recent victory for liberal parties in the Dutch election, shows that the rise of the far right - and the consequent threat to the EU project - is fading.
"It’s clear to me that the political risk within European democracies is now off the table, and, given their cheaper valuations [vs US stocks], that’s a good reason to buy European stocks again," says Howard Gold on Market Watch.
But for Matthew Lynn of the Daily Telegraph, investors are vastly overstating the importance of Macron's victory.
He cites the fact that his party, En Marche!, currently has no parliamentary candidates and so he is unlikely to win a majority to help him achieve his ambitious economic reforms.
He is also, says Lynn, likely to be thwarted in any attempt to formalise a budget and fiscal policy for the single currency - and will be prevented from creating demand in France through monetary expansion by the fact of the monetary union itself.
"It is always positive to avert Armageddon. Even so, Macron is likely to prove a disappointment," suggests Lynn.
"As that becomes clear over the summer, the [market] enthusiasm will evaporate very quickly."
Euro surges on win for 'France's Obama' in presidential poll
24 April
Independent presidential candidate Emmanuel Macron's victory in the first round of the French presidential election has given a boost to both the euro and French stocks.
At the time of writing, the euro had gained two per cent against the Japanese yen - "which investors tend to flock to when they perceive high levels of risk, says the BBC - and 1.2 per cent against both the dollar and the pound.
The single currency hit its highest level since 10 November, immediately after the US presidential election.
France's major share index, the Cac 40, was four per cent up in early trading this morning.
This investor enthusiasm reflects not only that the centrist Macron won the first round poll, but widespread confidence that he will emerge victorious against the far-right candidate Marine Le Pen in the run-off vote.
"Investors expect that Mr Macron will come out clearly ahead of Ms Le Pen in the second-round vote," says the Financial Times. "A snap poll from Ipsos on Sunday showed 62 per cent support for Mr Macron and 38 per cent for Ms Le Pen."
Why is a Macron victory so reassuring, even though in common with Le Pen he is an outsider not standing for one of the two main parties?
"Firstly, Macron is a politically stable, centrist candidate, almost like France's Obama… he is considered a safe pair of hands," responds Kathleen Brooks, research director at City Index.
"Secondly, it helps to solidify the future of the EU and the euro, something that Marine Le Pen wants to destroy."
Octavio Marenzi, chief executive of the financial research consultancy Opimas in Paris, added: "Macron will be reassuring to markets, with his pledge to lower corporate taxes and to lighten the administrative burden on firms.
"He basically represents continuity."
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
Women are getting their own baseball league again
In the Spotlight The league is on track to debut in 2026
By Justin Klawans, The Week US Published
-
Giant TVs are becoming the next big retail commodity
Under the Radar Some manufacturers are introducing TVs over 8 feet long
By Justin Klawans, The Week US Published
-
When will mortgage rates finally start coming down?
The Explainer Much to potential homebuyers' chagrin, mortgage rates are still elevated
By Becca Stanek, The Week US Published
-
Last hopes for justice for UK's nuclear test veterans
Under the Radar Thousands of ex-service personnel say their lives have been blighted by aggressive cancers and genetic mutations
By Sorcha Bradley, The Week UK Published
-
Will Donald Trump wreck the Brexit deal?
Today's Big Question President-elect's victory could help UK's reset with the EU, but a free-trade agreement with the US to dodge his threatened tariffs could hinder it
By Harriet Marsden, The Week UK Published
-
Marine Le Pen's fake jobs trial
The Explainer The far-right French leader could face a fine, jail time, and a five-year ban from public office if found guilty of embezzlement
By Abby Wilson Published
-
What is the next Tory leader up against?
Today's Big Question Kemi Badenoch or Robert Jenrick will have to unify warring factions and win back disillusioned voters – without alienating the centre ground
By Harriet Marsden, The Week UK Published
-
What is Lammy hoping to achieve in China?
Today's Big Question Foreign secretary heads to Beijing as Labour seeks cooperation on global challenges and courts opportunities for trade and investment
By Harriet Marsden, The Week UK Published
-
Why is Marine Le Pen on trial?
The Explainer French politician stands to lose more than her freedom if found guilty of embezzling EU funds
By Elizabeth Carr-Ellis, The Week UK Published
-
Is Britain about to 'boil over'?
Today's Big Question A message shared across far-right groups listed more than 30 potential targets for violence in the UK today
By Sorcha Bradley, The Week UK Published
-
UK's Starmer slams 'far-right thuggery' at riots
Speed Read The anti-immigrant violence was spurred by false rumors that the suspect in the Southport knife attack was an immigrant
By Peter Weber, The Week US Published