Emmanuel Macron was elected president of France on Sunday with a business-friendly vision of European integration, defeating Marine Le Pen, a far-right nationalist who threatened to take France out of the European Union, early projections from five polling organisations showed.
Below are reactions from economists, analysts, fund managers and other market experts.
PHILIPPE WAECHTER, PARIS-BASED CHIEF ECONOMIST AT NATIXIS ASSET MANAGEMENT:
“The risk on markets is that people ‘buy the rumour, sell the fact’, as everyone has already been playing a Macron win in the past days.
“Next, markets will be watching the legislative elections, of course. The estimates so far have been for a majority, which would make things a lot easier for him. The French are legitimist, likely to give the elected president a majority.
“We’ll also be closely watching his pick of prime minister – that will be the most important in the near term. He hasn’t given any indication of who this may be, and they will be essential in order for him to implement his whole legislative project.
“It’s clear from these results that the participation was not very high, and French society is fragmented. In the immediate aftermath, one of Macron’s duties will be to reconcile France.”
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DAVID VICKERS, SENIOR PORTFOLIO MANAGER, RUSSELL INVESTMENTS:
“When we were looking at Friday’s predictions for the euro, the average year-end forecast was $1.06 but there has been a lot of political overhang. Now that we’ve had this result, we think those forecasts will be moved higher as political risks are removed and (that) frees up the ECB to think more about unwinding quantitative easing in the face of stronger data.
“People have been unwinding tail risk since the first-round results, so Europe is one of the best-performing markets in the year-to-date having lagged previously.
“I expect spreads to be a bit tighter tomorrow and it will be interesting to see how duration reacts. The French/Bund spread has tightened already and further tightening could be limited. There is a risk now that bond yields could head higher from here.
“Macron does have to reconcile his country and I’m not quite convinced we’ve fully reversed anti-establishment sentiment. Undoubtedly he is a pro-European, so that could cast a shadow over Brexit negotiations.”
OCTAVIO MARENZI, PARIS-BASED CEO OF CONSULTANCY OPIMAS:
“Emmanuel Macron will now be in a position to take a very uncompromising position with the UK over Brexit. This is a fight that will get ugly, with Macron trying to attract as much business as possible away from the UK, with a special focus on the financial services industry. Macron is going to lower corporate taxes, create incentives to invest in equities, and reduce red tape. This will make Paris a magnet to wrest business away from London. At the same time, he has made it clear that he opposes any special arrangement between the UK and the European Union post-Brexit.”
ROBERT TIPP, CHIEF INVESTMENT STRATEGIST AT PGIM FIXED INCOME IN NEW JERSEY:
“Assuming that following today’s vote we move towards a situation where Macron may actually be able to advance a reform agenda and make some progress on the fiscal side, that should provide a possible underpinning for French markets and some of that will spill over to other markets, especially in Europe. People have been bashing Europe for years, (saying) the euro zone is a failed experiment, but I think that countries that have stuck to the rules of the euro zone have succeeded.”
“There have been some anxious moments over the last few months with Austrian, Dutch and French elections and some uncertainty in Germany, but the bread appears to be falling with the buttered side up.”
VINCENT JUVYNS, GLOBAL MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT
“First, the outcome was in line with expectations, to a bit higher. This was well priced into the market when you look at the CAC-40, bank stocks and the euro. So, it was well priced in after the first round. We’ve also had good macro economic data, which shows the euro zone economy is getting better.
“All of this points to some good performance in European assets, probably more in stocks than fixed income. (Bond) spreads have already tightened after the first round. But clearly the fact that political risk has reduced could see investors globally converging towards Europe.
“There are some nuances to bring – the country is divided and the turnout was low. It is a victory for Macron but he will need to win French hearts and win seats in the parliamentary elections to enact reforms.”
CRAIG ERLAM, SENIOR MARKET ANALYST, OANDA, LONDON
“It wouldn’t surprise me if we had a little bit of a relief rally on the back of this. The result was widely expected… It is one more potential political risk event pushed to one side and then it’s on to the next one because we have the Italian election some time in the next 12 months… It just goes to show that the disenchantment we saw in the UK and the U.S. with the political establishment is not as prevalent in Europe as it is elsewhere. So a bit of a relief rally but I don’t think there is going to be anything too extreme because markets had all but priced this in anyway.”
NAEEM ASLAM, LONDON-BASED ANALYST AT THINKMARKETS
“We are expecting the European markets to roar when traders start trading. This has eased a lot of concerns and investors will feel more comfortable in holding the riskier assets. The outcome of this elections result has also assured investors that the French debt ratings would not change either. Thanks to French people who do not like to surprise the people and what the polls predict is what we get in the results.”
“People and investors are feeling joyful because there will be no erection of barriers on the French border to restrict trade. ‘Frexit’ genie remains in the bottle and Emmanuel Macron has won the election. French voters have clearly expelled the populist surge which resulted in Brexit and carried Donald Trump to the White House.
“All eyes will turn towards the June parliamentary election because Macron needs to make sure that he has a strong hand in the parliament which will aid him to make swift moves.”