EconomyMay 8 2017

Euro rises as markets welcome Macron victory

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Euro rises as markets welcome Macron victory

The euro has risen 0.3 per cent against major currencies in overnight and early trading as markets welcomed an emphatic victory for France's new centrist president Emmanuel Macron.

On Sunday evening, Mr Macron's victory over far-right Front National leader Marine Le Pen was confirmed after he won almost two-thirds of the vote.

Although the victory was widely expected, confirmation has given both stocks and currency markets a boost.

The euro is up 0.3 per cent against the dollar and sterling, reaching a six month high against the former. Euro versus dollar is now trading at $1.097 while against the pound, the rate has fallen to £0.846.

The Euro Stoxx 50 index has opened up higher than Friday's close but has since been pared back.

Mr Macron's victory will help reduce political risk and uncertainty for investors, with the new president seen as a strong supporter of the EU and further integration, while his rival had touted leaving the currency union as a policy.

Additionally, his pro-business and labour reform agenda could aid stock performance in a market already benefiting from increasingly positive sentiment over earnings and economic growth.

M&G macro fund manager Steven Andrew said the rejection of protectionist policies from Ms Le Pen combined with the better macro backdrop could boost European stocks.

"Euro Area equities, currently attractively priced, could deliver substantial investment returns in the period ahead. A disruption to the ‘euro-fragmentation’ narrative should encourage investors to focus more on improving fundamental data across the region."

He added: "On the fixed income side, the debt of peripheral sovereigns such as Portugal should benefit from a reduced fear of political instability.”

Fidelity European fund manager Matt Siddle said: "Execution on his agenda will depend on the results of the legislative elections in June and his ability to form a majority, so it is too early to say what the exact impacts will be.

"However, simply not having Marine Le Pen as President will reduce the perceived political risks in Europe."