Macron's victory gets muted reaction from financial marketsComments
There was a mostly muted reaction on Monday from the financial markets to Emmanuel Macron’s emphatic but expected victory in the French presidential election
Macron has a massive amount to do. What's required is major surgery.Baader Bank anlayst
After a brief bounce, most of the main European indices dipped into the red. In Paris the main CAC 40 index hit a nine-year-high early on but finished Monday’s session one percent down.
The euro also lost value against the dollar and the pound, having earlier risen.
European markets brush off Macron win https://t.co/FVGu3NXTNypic.twitter.com/8RZIGvd8IL— Wall Street Journal (@WSJ) May 8, 2017
Market reaction was similar in New York where the S&P 500 and the Nasdaq Composite first hit record highs before losing ground.
Energy companies rose along with crude prices as Saudi Arabia’s oil minister said OPEC’s supply caps will be extended.
Massive reforms needed
Investors are now shifting their focus from politics to monetary policy, as analyst Robert Halver with Baader Bank explained: “Macron has a massive amount to do. The French malaise is massive. The French economy needs much more than a bit of a surface makeover. What’s required is major surgery. Reforms hurt and it’s clear that a lot of people in France won’t be happy with the reforms.”
High state spending in France was highlighted as a problem by the European Commission President Jean-Claude Juncker speaking at an event in Berlin on Monday.
“With France, we have a particular problem … The French spend too much money and they spend too much in the wrong places. This will not work over time,” Juncker said.
“There is now considerable risk that Macron will disappoint” https://t.co/MOxspQ569H— Victor Reklaitis (@vicrek) May 8, 2017
In London the FTSE 100 share index was little changed on the day.
European Union officials prefer pro-EU Macron as France’s leader in the run-up to Britain’s departure but it is not yet clear what it will mean for Brexit negotiations.
Analyst Mike Ingram with BGC Partners said: “I think the next crisis in the eurozone or the European Union is very definitely over Brexit. Of course Macron’s victory will embolden the ardent europhiles and the federalists. And of course Emmanuel Macron himself has voiced a desire to give Britain a particularly hard time in Brexit negotiations.”
Here's what France's new president thinks of Brexit (from our interview with Macron in March) https://t.co/jhP2An9WS3#Presidentielle2017pic.twitter.com/mEvIE4aB2h— Steve Bloomfield (@BloomfieldSJ) May 7, 2017
Macron’s top economic adviser tried to strike a moderate tone when asked about Brexit on Monday.
Jean Pisani-Ferry said the new French president will be tough in negotiations over the terms of the UK’s departure from the European Union but will not seek to punish Britain: “Punish? Certainly not. But he believes that today Europe is part of the solution to the problems we’re facing.”
In an interview with BBC Radio he said that no-one had an interest in a hard Brexit that totally severs ties between Britain and the rest of the European Union once it leaves.
Pisani-Ferry added that there was a mutual interest in maintaining economic and security ties.
“At the same time, we have divergent interests on some aspects of the negotiations. So there will be a tough negotiation and he will be tough.”
Macron will not want 'to punish' Britain says the President's economic adviser, Jean Pisani-Ferry https://t.co/rcOwF3xoC5pic.twitter.com/8BMO5lo8CT— BBC Radio 4 Today (@BBCr4today) May 8, 2017
Nice profile of
pisaniferry</a>, Macron's economic advisor. He has a big job, but he is well prepared. <a href="https://t.co/cbw44TPetG">https://t.co/cbw44TPetG</a></p>— Dani Rodrik (rodrikdani) May 8, 2017
Interesting read:— Tom Nuttall (@tom_nuttall) May 8, 2017
pisaniferry</a> as Macron's EU sherpa? <a href="https://t.co/ceYw8b9nDv">https://t.co/ceYw8b9nDv</a> via <a href="https://twitter.com/FT">FT