LONDON A poll out this morning has confirmed the suspicion that French presidential favourite Emmanuel Macron is struggling to get his campaign off the ground for the second round on May 7.
The Elabe survey found that one out of every two people surveyed considered that Marine Le Pen had started well against just 43 percent for Macron.
That was underlined when striking workers jeered Macron during a visit to the Whirlpool tumble-drier factory in his hometown of Amiens in northern France, hours after Le Pen turned up there to pose for smiling selfies with them. While it is not certain that these PR stunts translate into votes, it fits the far-right candidate's strategy of being seen as on the side of ordinary people against a supposedly distant and elite Macron. So far, at least, Macron's 60-40 lead looks to be holding.
Lingering doubts over the French second round are among the reasons why the European Central Bank will likely keep its ultra-easy policy stance firmly in place at its rate-setting meeting today. Political uncertainties have been a factor repeatedly cited by Mario Draghi as he justifies the Bank's unprecedented stimulus programme of past months, even as the underlying eurozone economy goes from strength to strength.
Better growth prospects are something he may acknowledge later today, setting the stage for a small signal as early as June about an eventual reduction of stimulus. Before that, data are expected to show German consumer sentiment improving, while its inflation is seen bouncing back to 1.9 percent after having eased to 1.5 percent last month.
Today's most prickly meeting is likely to be the one in Brussels between European Commission chief Jean-Claude Juncker and Hungarian Prime Minister Viktor Orban. It comes a day after the EU opened a legal case against Hungary over a threat to close a Budapest university founded by the liberal U.S. financier George Soros. Orban is predictably defiant, dismissing the Hungarian-born Soros as a "financial speculator" and telling the EU it needs to reform.
This row has become the latest in a series of tense stand-offs between backers of the EU's broadly liberal values and self-styled "illiberal" authoritarians in the east, notably Hungary and Poland.
MARKETS AT 0655 GMT
If the Bank of Japan was today prepared to offer its most upbeat economic assessment in nine years, then ECB chief Mario Draghi has as at least as much cause for optimism when he meets the press after Thursday’s policy meeting. Certainly the incoming euro zone business surveys and Q1 earnings reports point to a punchy start to the year for the bloc despite the plethora of political risks laced through the year’s electoral calendar.
On Thursday alone, Deutsche Bank said its profits surged in the first quarter on buoyant debt trading, BASF’s operating profit jumped almost 30 percent, STMicro recorded a Q1 revenue jump for the first time in six years and Lufthansa said it clocked a profit for the first time since 2008.
While it's not all sweetness and light, as the big Q1 miss at Airbus would attest, the bullishness toward European equity and the euro is well founded amid another buoyant spell for record-high world stocks in general. The relative performance of euro zone economies during the past quarter will also be underlined as GDP reports on both sides of the Atlantic are released on Friday.
But not unlike the BOJ earlier, the ECB won’t alter its policy settings today. Rather the focus will be on how Draghi interprets this economic upswing and the inflation implications inherent. And if one reason for continued dovishness of late has been wariness about the outcome of the French election, then it makes no sense to signal any dramatic change of tack before the second round on May 7 – regardless of the market optimism that centrist Macron will defeat the far-right candidate Le Pen.
ECB sources told Reuters this week that the June meeting will be a more likely moment to signal anything further on tapering the bond buying programme. The euro has sustained much of this week’s post-French election move and sits just above $1.09 on Thursday.
More broadly, this week's latest leg up in global stock markets levelled off again overnight as U.S. President Trump’s much-flagged tax cut plan, yet again, came up short on details of how it would be funded and negotiated through congress – merely restating the existing campaign pledges to slash corporate tax rates to 15 percent and give one-off relief to repatriated overseas profits.
On a slightly more upbeat note, for Mexico and Canada at least, expectations of a unilateral U.S. withdrawal from the North America Free Trade Agreement was instead replaced by plans to renegotiate the trade pact.
Amid a still-robust U.S. earnings season registering a hefty annual earnings growth of 11.8 percent, U.S. equities dialled back slightly on Wednesday on disappointment about the lack of details on the tax reform. Asia bourses were more mixed overnight too and European stocks are expected to give up a little of the week’s outsize gains later too.
Europe corp events: Nordea, Nokia, BASF, Lufthansa, Bayer, WPP, Total, Nestle, Lloyds, AstraZeneca, Orange, Airbus, Taylor Wimpey, Weir, Persimmon, STMicro, Schroders, Allied Minds, Renault.
(Editing by Richard Lough)