CAC Climbs to 9-Year High after French Vote

The CAC is showing little movement in the Tuesday session. Currently, the index is trading at 5,289. On the economic front, there are no German or Eurozone indicators on the schedule.

European investors cheered the results from the first round of the first round of the French presidential election. The CEC posted sharp gains on Sunday, and the index touched a high of 5295 on Monday, its highest level since January 2008. The markets breathed a collective sigh of relief, as opinion polls accurately forecast the outcome. The field of 11 candidates in the first round was pared to just 2 candidates, centrist Emmanuel Macron and far-right Marie Le Pen. Macron garnered 24% of the vote and Le Pen 22%. The runoff vote takes place on May 7 and French voters will have a crystal clear choice as they head back to the polls on Sunday. Macron, who served as a minister under Socialist Francois Hollande, favors deregulation and is a staunch supporter of the European Union. Le Pen, who heads the National Front, has campaigned on a ‘France first’ platform, vowing to curb immigration and take France out of the eurozone. Hollande and Francois Fillon, who ran in the first round, have thrown their support behind Macron and asked voters to reject ‘extremism’. Macron is a heavy favorite to win the second round and become president, with polls giving him a comfortable lead of above 60%. Since opinion polls were accurate ahead of the first round of voting, the markets appear to relying on the current polls as well, meaning that a Macron victory has been priced in. Unless this sentiment drastically changes during the week, the election will be a non-event for the market. At the same time, nothing is a sure thing in politics, as underscored by the Brexit vote and the election of Donald Trump, two events which stunned the markets and triggered strong market movement.

President Trump will have to reach out to the Democrats in order to avoid a shutdown of the federal government on Saturday. Congress must pass a spending bill which will fund the government until October, but the bill requires the backing of 60 senators. This means that the Republicans (who control 52 seats) will need the support of 8 Democrats. This has led to bipartisan negotiations, and it’s reasonable to expect that these talks could go down to the wire, as both sides try to stick to their positions and try not to blink first. The last shutdown was in 2013, lasting 17 days. Another shutdown would be embarrassing for Trump, as it would start on his 100th day in office and would cast doubts on his ability to push his budget and tax plan through Congress.

Economic Calendar

Tuesday (April 25)

  • There are no German or Eurozone events

CAC, Tuesday, April 25 at 8:15 EST

Open: 5272.00 High: 5291.50 Low: 5259.25 Close: 5289.50

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.
Kenny Fisher

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