Emmanuel Macron won a landslide victory yesterday, taking 65% of the vote in the French presidential election, a larger margin than had been predicted in the polls. The initial reaction in equity markets appears to be muted, with the result broadly as expected.
Markets were subdued in the run up to the election although there were a number of positive narratives last week. The Obamacare replacement bill was passed, which bodes well for the likelihood of the Trump administration passing further market friendly legislation. US jobs data was also positive, with another 211,000 people added to the nation's payroll in April. Economic data emanating from Europe struck an optimistic tone, with PMIs hitting a six year high, inflation data moving higher (albeit still below the 2% target), and GDP figures coming in at roughly the same as the US.
The US reporting season is drawing to a conclusion, with over 78% of the S&P having reported results since April 3rd. More than 72% of companies have beaten estimates, with Tech and Industrials amongst the best sectors.
The global index finished the week up 0.1%, with Ireland performing strongly at 4.2%. Gold slipped by 3.7% as a more 'risk-on' sentiment prevailed in the market. Oil was down also, as confidence in OPEC production cut plan continues to fade. US 10-year yields moved to 2.35% from 2.28% a week ago.
The week ahead
Thursday 11th May:
The Bank of England's Monetary Policy Committee meets in London, where no change in policy is expected. Markets however will closely monitor any comments in relation to recent Sterling strength.
Friday 12th May:
US inflation data is released where the April CPI figure is forecast to be 0.2% (month-on-month), from a previous reading of -0.3%.
Friday 12th May:
German GDP for Q117 goes to print where a figure of 0.7% (quarter-on-quarter) and 1.7% (year-on-year) is forecast, up from 0.4% and 1.2% respectively from the last reading.