Incisive market commentary from David Morrison

Stay ahead with our market commentary and webinars from our in house market strategist

Open a Live AccountOpen a Demo Account
+ Show blog menu



Collapse 2017 <span class='blogcount'>(348)</span>2017 (348)
Expand November <span class='blogcount'>(26)</span>November (26)
Expand October <span class='blogcount'>(24)</span>October (24)
Expand September <span class='blogcount'>(33)</span>September (33)
Expand August <span class='blogcount'>(26)</span>August (26)
Expand July <span class='blogcount'>(32)</span>July (32)
Expand June <span class='blogcount'>(28)</span>June (28)
Expand May <span class='blogcount'>(35)</span>May (35)
Collapse April <span class='blogcount'>(31)</span>April (31)
GDP data in focus - AM Briefing
28 Apr 2017
ECB round-up and US GDP look-ahead - Video Update
27 Apr 2017
ECB meeting in focus - AM Briefing
27 Apr 2017
ECB's Rate Meeting, a look ahead - Video Update
26 Apr 2017
High hopes for Trump tax cuts - AM Briefing
26 Apr 2017
Global stock indices storm higher - PM Bulletin
25 Apr 2017
Indices mixed after firmer open - AM Briefing
25 Apr 2017
How to use Stop Losses in FX - Trading Guide
24 Apr 2017
French vote sees risk assets soar - AM Briefing
24 Apr 2017
Mixed European open despite Wall Street rally
21 Apr 2017
French Election in focus - Video Update
20 Apr 2017
French election and oil keep investors cautious - AM Briefing
20 Apr 2017
Equities off highs but still show resilience - Video Update
19 Apr 2017
Equities continue to drift lower - AM Bulletin
19 Apr 2017
Sterling soars on early UK election, but France the biggest concern
18 Apr 2017
Europe shrugs off US rally - AM Bulletin
18 Apr 2017
Trump's mouth sends dollar skidding lower - Video Update
13 Apr 2017
Dollar slumps on Trump comments - AM Bulletin
13 Apr 2017
Uncertain outlook ahead of holiday weekend - Video Update
12 Apr 2017
Equities recover after yesterday’s wobble - AM Briefing
12 Apr 2017
USDJPY approaching support - PM Bulletin
11 Apr 2017
Equities drifting in holiday-shortened week - AM Briefing
11 Apr 2017
Look-ahead to Janet Yellen’s speech this evening - PM Bulletin
10 Apr 2017
All eyes on G7 and Yellen - AM Bulletin
10 Apr 2017
US missile attack sends investors into “risk-off” mode - AM Briefing
07 Apr 2017
FOMC minutes rattle investors - Video Update
06 Apr 2017
Stunning reversal greets Fed minutes - AM Briefing
06 Apr 2017
ADP number points to big payroll beat on Friday - Video Update
05 Apr 2017
FOMC minutes in focus - AM Briefing
05 Apr 2017
US indices flag as first quarter ends - PM Bulletin
04 Apr 2017
Disappointing start to the new quarter - AM Briefing
04 Apr 2017
Expand March <span class='blogcount'>(38)</span>March (38)
Expand February <span class='blogcount'>(36)</span>February (36)
Expand January <span class='blogcount'>(39)</span>January (39)
Expand 2016 <span class='blogcount'>(483)</span>2016 (483)


Early moves

Equities soar after Macron takes lead

Euro gaps higher while gold slumps

Global stock indices were sharply higher on the open following yesterday’s vote in the first round of the French presidential election. There has been widespread relief that the centrist candidate Emmanuel Macron is on course to win the biggest percentage of the vote. The far right, Eurosceptic candidate Marine Le Pen also goes through to the final head-to-head in two weeks’ time. However, recent polling has suggested that Macron should win easily which means that France will end up with a solidly pro-European leader.

Investors have piled back into riskier assets while dumping safe havens such as gold, silver and the Japanese yen. The French CAC40 was up close to 4% in early trade while the euro rose 2% against the Japanese yen. The big question now is if this means that the stock market wobble that has taken place over the last two months or so if finally over. Alternatively, this may prove to be little more than a temporary relief rally which will soon fade as geopolitical concerns together with worries about the US economic outlook once more take centre stage.

Stock Index Update

Investors buy equities following Macron win

But Shanghai Comp has worst session so far this year

Global stock indices have surged in early trade as investors respond to yesterday’s French presidential election result. The “moderate, centrist” and most importantly Europhile Emmanuel Macron won the biggest share of the first round vote and is now the favourite to win the presidency when he goes head-to-head with far right candidate Marine Le Pen in two weeks’ time. The latest polling suggests that Macron leads Le Pen by as much as 20% in a straightforward run-off. Of course, we’ve been wrong-footed by polls on a number of important occasions recently. However, Le Pen remains a particularly divisive candidate and there’s little evidence that supporters of the other main candidates in yesterday’s vote will rush to vote for her. Soon after conceding defeat, Conservative candidate Francois Fillon called on his supporters to vote for Macron in the final round to ensure stability in France and for the future of the European Union. Socialist candidate Benoit Hamon did the same, although whether their supporters heed these calls or not is another matter. So in some respects it’s fair to express some caution over the final outcome.

But it is also worth noting that not all global indices rallied on the news. China’s Shanghai Composite lost around 1.4% overnight to post its worst performance so far this year. The sell-off came as the Xinhua News Agency suggested that recent economic stability provided a good environment in which to boost the regulatory environment and reduce leverage within the financial system.

Commodities Update

Crude bounces after last week’s sell-off

Gold and silver slump after Macron leads vote

Crude was a touch firmer in early trade on Monday, in a move which reflected a general increase in risk appetite following the vote in the first round of the French presidential election. Investors were relieved that the much-feared “nightmare scenario” whereby the two Eurosceptic candidates, Le Pen and Melenchon, went through to the next round didn’t materialise. Far-right candidate Le Pen now faces the centrist contender Emmanuel Macron. However, polls suggest that the pro-European Macron should easily beat Le Pen in the head-to-head on 7th May.

Crude oil ended lower last week with the vast proportion of the losses coming on Wednesday. This followed the latest US inventory update from the Energy Information Administration (EIA). The EIA reported a significant build in gasoline stockpiles, confounding expectations of a large drawdown. The news confirmed last Tuesday’s report from the American Petroleum Institute (API).

Gold and silver both slumped overnight as it became apparent that Emmanuel Macron had captured the biggest percentage of the vote in the first round of the French presidential election. Macron will now face the far-right Eurosceptic candidate Marine Le Pen in the final head-to-head in two weeks’ time. In some respects this should still be a risky proposition as Le Pen must have some chance in a two-horse race. However, recent polling has suggested that Macron would beat Le Pen easily if they were to face each other in the second round. On top of this, investors are expressing relief that the “nightmare scenario” didn’t materialise. This was the possibility of the two Eurosceptic candidates, Le Pen and Melenchon, going through to the final on 7th May which would have caused panic throughout the European Union.  Le Pen wants to give up the euro and hold a referendum on EU membership. Melenchon wanted to demand a referendum if France was unable to renegotiate its relationship with the EU.

Forex Update

Euro soars after French vote

Yen slumps as risk appetite returns

The euro soared overnight as Emmanuel Macron emerged as the favourite to win the French presidential election run-off in two weeks’ time. There’s been a sharp and widespread “risk-on” move which has also seen investors dump the Japanese yen and head back into higher-yielding currencies. This has happened even as the Eurosceptic far-right candidate Marine Le Pen also went through to the final round. The conventional wisdom holds that Macron will easily beat Le Pen in the head-to-head on 7th May.

On Friday the euro drifted lower as investors reduced their exposure to the single currency ahead of the first round vote in the French Presidential election. Nervousness ahead of Sunday’s vote overrode some fairly solid Manufacturing and Services PMIs from across the Euro zone which were released earlier in the day. Despite Friday’s pull-back the EURUSD remained within 2% of the multi-month high it hit last month, suggesting that the majority of investors were fairly relaxed about the outcome of Sunday’s vote. This could have been because few people felt there would be any lasting effect from a Le Pen win. After all, she would need parliamentary approval to abandon the euro or leave the European Union and that isn’t going to happen. Also, many will be thinking back to the big risk-off moves following Brexit and the US election which reversed quickly.

Upcoming events

Today’s significant economic data releases and events include Germany’s Ifo Business Climate survey and the German Bundesbank’s Monthly Report. From the UK we have CBI Industrial Order Expectations and Federal Reserve Bank of Minneapolis President and FOMC-voting member Neel Kashkari will speak at the University of California.


Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


Posted by David Morrison

Category: AM Bulletin

Add a comment Add comment            


© 2018 Spread Co Limited. All Rights Reserved.

Spread Co Limited is a limited liability company registered in England and Wales with its registered office at 22 Bruton Street, London W1J 6QE. Company No. 05614477. Spread Co Limited is authorised and regulated by the Financial Conduct Authority. Register No. 446677.

Spread betting and CFD trading are leveraged products and can result in losses that exceed your deposits. Ensure you understand the risks.

Losses can exceed deposits. Click here to learn more.