On 08 May, 2017 – French election result met expectations

Global market reaction to Macron’s French victory was muted.
United States
US stock indices hovered around the unchanged mark Monday trading with a lack of direction. When trading ended, the Dow Jones industrials were up 4.72 points and the Nasdaq added 1.90 points. The S&P slipped 0.10 point. Investors expected Emmanuel Macron’s victory in the French presidential election.
A slump in materials shares offset gains in the energy and technology sectors. Freeport-McMoRan and DuPont were lower. Exxon Mobil and Chevron advanced. Apple rose after Warren Buffett’s Berkshire Hathaway disclosed it had more than doubled its stake in the company during the first quarter. Newell Brands gained after reporting stronger revenue and profit for its latest quarter than expected. The company, whose brands include Paper Mate, Elmer’s and Calphalon, also raised its earnings forecast for the year. Horizon Pharma dropped after the drug maker reported weaker than expected first quarter earnings.
Tyson Foods declined after reporting weaker revenue and earnings for its latest quarter than expected. The company said fires at two of its chicken plants hurt results. Kate Spade surged after agreeing to a $2.4 billion buyout by Coach. Coach will pay $18.50 per share for Kate Spade. Coach also advanced. Tribune Media jumped after Sinclair Broadcast Group said it would buy Sinclair in a cash-and-stock deal valued at $43.50 per share, or a total of $3.9 billion. Sinclair was lower. Micron Technology was lower on a broker downgrade.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$1.75 to US$1,229.80. Copper futures were down 1.5 percent to US$2.49. WTI spot crude was up 23 US cents to US$46.45. Dated Brent spot crude was up 26 US cents to US$49.36. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.3 percent. The yield on US Treasury 30 year bond was up 4 basis points to 3.02 percent while the yield on the 10 year note was up 3 basis points to 2.38 percent.
Europe
European shares declined on profit taking after a brief relief rally after candidate Emmanuel Macron won the French presidential election. While investors welcomed his win, they said his ability to deliver reforms depend on securing a strong enough majority in parliament in legislative elections on June 11 and 18. The CAC and DAX were down 0.9 percent and 0.2 percent respectively. The FTSE was virtually unchanged (up 3.43 points) while the SMI added 0.3 percent.
Banks which are more sensitive than other sectors to political factors declined. Both BNP Paribas and Société Générale retreated. Renault, Peugeot, Vinci and Saint Gobain were all lower tracking while Eiffage edged higher. PostNL declined after revenue growth at the Dutch postal firm missed expectations in the first quarter. Tod’s was lower thanks to a weak first-quarter and a broker downgrade. Akzo Nobel declined after it rejected a third takeover proposal from US rival PPG Industries. It said the €26.9 billion proposal undervalued the company, faced antitrust risks and does not address other concerns such as “cultural differences”. Carrefour advanced.
German March manufacturing orders increased a greater than anticipated 1.0 percent on the month. From a year ago, orders were up 2.3 percent. The headline gain was wholly attributable to foreign demand as overseas orders were up 4.8 percent while the domestic market contracted 3.8 percent.
Asia Pacific
Asia Pacific stocks were broadly higher Monday with Japanese shares closing at a 17-month high, as the yen weakened on expectations of a Federal Reserve rate increase at its June meeting. Easing concerns over the advance of populist politics in Europe also helped lift the indices.
However, the Shanghai Composite retreated 0.8 percent after merchandise trade data disappointed investors. The Hang Seng climbed 0.4 percent. On the year, exports (in US$ terms) were up 8.0 percent, lower than the expected increase of 12.1 percent and March’s 16.4 percent gain. Imports (also in US$ terms) were up 11.9 percent against expectations of a 16.5 percent increase and March’s 20.3 percent jump. The China Insurance Regulatory Commission (CIRC) said loopholes should be plugged, and in its latest bid to curb “aggressive” insurance money, it barred Anbang Life Insurance, a unit of Chinese conglomerate Anbang Group, from applying to issue new products for three months.
Both the Nikkei and Topix rallied 2.3 percent as trading resumed after last week’s Golden Week holidays. Automakers Honda Motor, Toyota, Mazda and Suzuki Motor climbed after the euro hit a one-year high against the yen. Canon, Panasonic and Sony rallied while Keyence advanced on foreign fund buying.
Both the S&P/ASX and All Ordinaries added 0.6 percent as iron ore and steel futures prices rose and Westpac reported a 3 percent rise in interim cash profit, in line with market expectations. Media stocks also surged after the federal government proposed scrapping media ownership restrictions. Economic data were mixed with a gauge of Australian business confidence hitting its highest level in seven years in April, while building approvals declined at a faster-than-expected pace in March. Banks Westpac, Commonwealth and NAB advanced while ANZ retreated. Miners BHP Billiton, Rio Tinto and Fortescue Metals Group were higher after copper recovered from a five-month low. A recovery in oil prices lifted energy majors including Oil Search, Woodside Petroleum and Santos.
The Kospi added 2.3 percent to close at a fresh record high for a second straight session. The Sensex was 0.2 percent higher after pro-European centrist Emmanuel Macron’s victory in the French presidential election.
Looking Forward
Australia posts March retail sales. Germany releases March industrial production and merchandise trade balance. In the US, JOLTS and wholesale trade for March will be reported.
Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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