Emmanuel Macron’s victory in the French presidential election will be greeted with relief in markets. However, other risks will soon command attention. Read more...
Emmanuel Macron’s victory—and Marine Le Pen’s defeat—in the second round of the French presidential election will be greeted with widespread relief in markets, with bond spreads tightening alongside rallies in bonds and currencies. Although Macron’s En Marche! movement is unlikely to gain a majority of seats in the National Assembly elections in June, his centrist politics should mean he can form a coalition government with the Republican Party.
Macron is a strong supporter of the European Union (EU) and is likely to work well with German Chancellor Angela Merkel, which may make Brexit negotiations tougher for the UK but could also spell relief for peripheral countries seeking greater fiscal flexibility.
The French financials and telecommunications sectors are among those set to benefit from a Macron presidency. In fixed income, peripheral sovereign bonds may come under pressure as the markets focus on other risks, including elections in other countries and the European Central Bank’s next move.