Investment Clock insights

Don't pop the champagne corks just yet, despite French election rally


Trevor Greetham

24 April 2017

The main worry for investors and traders watching the French election was that voters would be presented with a choice between anti-EU candidates on the left and right in the second round. With roughly 55% backing pro-EU candidates over the weekend and the polls clearly pointing to a Macron victory in the run off with Le Pen, the euro rallied strongly.
In stocks and bonds, markets were also taking the good news early as French bond yields dropped and stock markets rallied across the board.
However, it’s worth noting that the French election is likely to be the first of several risks to test markets as thin summer trading comes into view. Signs of a temporary peaking out in global growth, the impact of tightening moves in China and, first up, a potential government shutdown in the US at the end of this week, mean investors can’t pop the champagne corks just yet.

The main worry for investors and traders watching the French election was that voters would be presented with a choice between anti-EU candidates on the left and right in the second round. With roughly 55% backing pro-EU candidates over the weekend and the polls clearly pointing to a Macron victory in the run off with Le Pen, the euro rallied strongly.

In stocks and bonds, markets were also taking the good news early as French bond yields dropped and stock markets rallied across the board.

However, it’s worth noting that the French election is likely to be the first of several risks to test markets as thin summer trading comes into view. Signs of a temporary peaking out in global growth, the impact of tightening moves in China and, first up, a potential government shutdown in the US at the end of this week, mean investors can’t pop the champagne corks just yet.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.