Market movers today
This morning market focus will be on the out come of yesterday’s French president ial election in which independent Macron defeat ed the Front Nat ional’s Le Pen with 66.1% against 33.9%. This was a greater margin of victory than opinion polls had projected.
In terms of data releases focus will be on euro area Sentix investor confidence which we expect to climb further as markets seemed relieved by the outcome of the first round of the French election.
The German factory orders are also released today. The figure reported a 3.4% monthly increase in February, following the 6.8% fall in January. We estimate a monthly decline of 2.3% for March but note that the volatility in the figure since October 2016 has been higher than usual, meaning a 2.3% decrease is of less significance than previously
The Fed’s Bullard (non-voter, dove) and Mester (non-voter, hawkish) are both scheduled to speak in the afternoon. Here, we hope to get some more colour on the different views within the commit tee after the relatively dull FOMC statement released on Wednesday last week.
During the rest of the week focus will be on US CPI inflation after the sharp fall in March, German GDP growth for Q1 and the BoE which we expect to keep rates unchanged.
Selected market news
In the final run-off of France ‘s president ial election, independent Emmanuel Macron defeated the Front National’s Marine Le Pen with an even greater margin of vict ory (66.1% against 33.9%) than opinion polls project ed. Market s will now wat ch out for Macron’s choice of prime minister and cabinet , which he has promised to announce once sworn into office on 14 May. The next key event in the election t imeline will be the parliamentary elections for the National Assembly to be held from 11-18 June under a similar two-round voting system as in the presidential election. The National Assembly is the main legislative body, as it takes prominence over the Senate in law making, and has the power to take down the government in a noconfidence vote. How much of his policy proposals Emmanuel Macron can actually implement will therefore depend on how many seats his movement En Marche! (EM) can secure in the election.
‘On Friday, the US jobs report for April was released, and showed solid jobs growth of 211,000. While the FOMC members will welcome the solid jobs growth and the lower unemployment rate, as it supports their view that monetary policy should be tightened gradually, we think they are concerned about the subdued wage growth, as it part ly reflects lower inflat ion expectations. For more details see Flash Comment US: Subdued wage growth a concern for the Fed, 5 May.
Saudi Arabia’s oil minister has said thathe expect s OPEC to extend the oil cut deal int o the second half of the year and possibly beyond.
