Wall Street set to rise, Euro gives up some gains as Macron seals French election victory

By Reuters   May 8, 2017 | 09:23 am GMT+7
Wall Street set to rise, Euro gives up some gains as Macron seals French election victory
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2017. Photo by Reuters/Brendan McDermid

The euro had been on a rising trend in the days ahead of the election, as investors began to position for a Macron victory.

The euro edged away from highs hit early in the Asian session on Monday as investors took profits from its gains after centrist Emmanuel Macron's victory over the far-right Marine Le Pen in France's presidential election.

Macron's resounding defeat of a nationalist who had threatened to take France out of the European Union brought relief to investors who had feared another populist upheaval after Britain's vote to exit the European Union and Donald Trump's election to president last year.

Macron's margin of victory appeared even larger than expected. With most votes counted, he had garnered around 65.5 percent against Le Pen's 34.5 percent - a wider gap than the 20 or so percentage points pre-election surveys had suggested.

The euro had been on a rising trend in the days ahead of the election, as investors began to position for a Macron victory.

"The market already priced in the victory of Macron," said Masafumi Yamamoto, chief currency strategist for Mizuho Securities in Tokyo, as U.S. Treasury yields rose. "We saw some additional rise of the euro this morning, but considering the difficulty for Macron's party to get a majority in the national assembly election, he may not bring higher growth."

wall-street-set-to-rise-euro-gives-up-some-gains-as-macron-seals-french-election-victory

French President elect Emmanuel Macron celebrates on stage with his wife Brigitte Trogneux during his victory rally near the Louvre museum after results in the 2017 presidential election in Paris, France, May 7, 2017. Photo by Reuters/Thomas Samson

Looking at positioning in the euro, he said, "the market has squared its short positions, but there are no fresh reasons to take long positions, as there will likely be no new positive developments, and limited scope for upside for the euro."

In early Asian trading, the euro rose as high as $1.1024 , its highest since Nov. 9. It also jumped to a one-year high of 124.58 yen against its Japanese counterpart, and a five-month high of 1.08865 Swiss franc.

It last edged down to $1.0986 against the dollar, down 0.1 percent on the day, and at 123.94 yen, also down 0.1 percent.

The dollar was steady on the day at 112.79 yen, after jumping to a seven-week high of 113.14 yen in early trade.

The dollar index, which tracks the U.S. currency against a basket of six major rivals, was slightly higher on the day at 98.673, after dipping as low as 98.387 earlier, its lowest since November.

The French election eclipsed Friday's U.S. employment data, which showed nonfarm payrolls rose by 211,000 in April. The unemployment rate fell to 4.4 percent, near a 10-year low and well below the most recent Federal Reserve median forecast for full employment.

Wall Street set to rise after Macron wins in France

U.S. equity index futures edged higher on Sunday in the wake of a victory by the centrist candidate in the closely watched presidential French election, suggesting the benchmark S&P 500 may push further into record territory when trading reopens on Monday morning.

S&P 500 emini futures ESv1 were last up fractionally after electronic trading reopened for the week late on Sunday afternoon. Futures initially ticked about 0.2 percent higher but have since pared some of the gain.

The move came after independent centrist Emmanuel Macron, who favors keeping France inside the European Union, was elected the country's president, easily beating back a challenge from EU critic Marine Le Pen.

On Friday the S&P 500 .SPX marked a record-high close, as energy stocks bounced back along with oil prices and the government reported U.S. job growth had rebounded in April.

Macron's victory was seen as a supporting factor for global equity markets that have had some concern about the tide of nationalism and protectionism in recent political contests on both sides of the Atlantic.

"It's a win for Europe, and it's a win for global markets," Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"We didn't see a strong risk-off market going into today's runoff. That said, there was always trepidation that perhaps this time the pollsters would have it wrong."

Macron had secured more than 65 percent of the vote to Le Pen's 34.5 percent with 45 million ballots counted out of 47 million registered French voters.