CAC Unable to Capitalize on Macron Landslide

The CAC has posted slight losses in the Monday session. Currently, the index is trading at 5,379.80. On Sunday, Emmanuel Macron had little trouble beating Marie Le Pen to win the French presidential election. On the release front, there are no major events out of the eurozone. There was positive news to start off the week, Eurozone Sentix Investor Confidence climbed to 27.4, beating the estimate of 25.3 points. The indicator has now improved over four consecutive months, pointing to stronger confidence among investors and analysts. The improvement in confidence is linked to the stronger eurozone economy, as key numbers such as PMI reports continue to point to expansion in the eurozone manufacturing and expansion sectors.

Emmanuel Macron was widely expected to win the French presidential victory, and when the ballots were counted, the only surprise was the extent of Macron’s margin of victory. Macron won 64% of the popular vote, with Marie Le Pen taking 36%. The CEC showed gains after the election, but has retracted in the Monday session. Given that the markets had priced in a Macron victory, it’s not surprising that the Sunday rally did not last. Although Macron certainly “won big”, it should be noted that fully one third of French voters either abstained or voted a blank ballot as a protest vote. This means that Macron was viewed by many voters as a default choice, given that his opponent was the leader of the far-right and has been accused of being racist and xenophobic. Next stop is the French parliamentary election, slated for mid-June. Macron’s En Marche! party is barely a year old and is unlikely to win a majority, which would mean a power-sharing setup in parliament, likely between Macron’s party and the center-right. Similar to the presidential election, the parliamentary election promises to be full of uncertainty, and opinion polls during the election campaign will be important as fundamental releases and should be treated as market-movers. Opinion polls were fairly accurate in projecting the results of the two rounds of voting, which will magnify their importance ahead of the June parliamentary election.

French Election Timeline

May 7 – Emmanuel Macron wins French presidential election

May 11 – Official proclamation of President Emmanuel Macron

May 14 – [from midnight] End of Francois Hollande’s mandate

June 11 – First round of legislative elections

June 18 – Second round of legislative elections

Economic Calendar

Sunday ( May 7)

• French Presidential Election

Monday (May 8)

• 8:30 Eurozone Sentix Investor Confidence. Estimate 25.3. Actual 27.4

*All release times are EDT

*Key events are in bold

CAC, Monday, May 8 at 8:30 EDT

Open: 5349.80 High: 5370.30 Low: 5342.50 Close: 5368.00

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