The final tally was Macron 23.75%, Le Pen 21.53% and to say markets are relieved
“While today should be a good one for the euro and risky assets, the party may be short-lived; it wonâ€™t take long before market focus swings back to the United States and a potential government shutdown at the end of the week.”
“Following a â€œdisruptiveâ€ election outcome, however, the market may expect a more accommodative tone from the ECB, and the Riksbank is likely to announce an extension of its QE programme that is due to end in June.”
“If markets turn more negative on the possibility of deposit flights out of the French banking system or on Italian BTPs and banks, the currency can fall more in the absence of a decisive response from the ECB. But, if the ECB were to show a strong hand in the market, buying sovereign debt, this perception could change.”
“Melenchon now has a genuine chance of reaching the second round and, in purely markets terms, he would be as bad, if not worse, for French and European assets. Crucially, polls suggest that if Emmanuel Macron stumbles, the leftist would beat both Le Pen and Francois Fillon in a second-round runoff.”
The tough thing about a market dominated by geopolitical concerns is that geopolitics is country- or at least region-specific. There’s nuance, idiosyncrasies, thousands of years of history peculiar to this country or that, religious undercurrents, etc., etc. You have to take all of that into account when trying to make sense of markets in the context of multiple geopolitical powder kegs.
“Should a synchronous recovery take hold, we believe dollar weakness would be bullish for USD oil prices. While micro supply/demand fundamental oil balances still point to higher oil this summer, oil could soon sing â€œVive la Franceâ€. We retain our $70/bbl end-of-June target for Brent.”