LONDON (Reuters) - Emmanuel Macron will be looking to get his campaign back on-message today after being widely judged in French media to have mis-played the first 48 hours following his first-round victory on Sunday.
He stands accused - even by those who have endorsed him for the May 7 runoff - of having appeared too smug in celebrations. Some of this is a bit harsh - the restaurant with the 46-euro-a-head set menu where he celebrated is hardly Fouquet‘s, the swanky Champs-Elysees joint which Nicolas Sarkozy chose for his victory party in 2007. But it still smacked of cushy Parisian living and that provides easy attack fodder for Marine Le Pen. Today Macron holds a rally in the town of Arras, very much a part of the northern stronghold of Le Pen.
There will be more than the usual interest when the German government publishes its updated forecast for GDP growth this year after leading economic institutes slightly revised up their joint estimate to 1.5 pct in 2017. Although the consensus is that the ECB will not change its pro-easing bias at Thursday’s meeting, talk of tapering is coming back into fashion and policy hawks will use any sign of strength in the euro zone’s top economy to support their case.
Finally a word for fans of political neologisms: “Quitaly”. This one briefly did the rounds last year on concerns about the euro zone’s third largest economy. Now, with “Frexit” concerns subsiding, some are shifting their anxiety back to the euro zone’s third largest economy and fears of growing anti-euro sentiment there ahead of elections to be held by early next year at the latest.
MARKETS AT 0655 GMT
Global equity markets continue to charge higher, with MSCI’s index of world stocks setting new records and on course for its best week of a year that’s already notched up gains of more than 8 percent.
With U.S. Q1 earnings growth now coming in at 11.4 percent, Wall St is central to that renewed surge, with the Nasdaq hitting record highs overnight and Dow Jones index flirting with 21,000 again for the first time since early March.
U.S. President Trump’s expected announcement on corporate tax cuts later on Wednesday has been an additional catalyst, as has the receding threat of a U.S. government shutdown this weekend after Trump backed away from demanding Congress include funding for his planned border wall with Mexico in a spending bill. Ten-year Treasury yields are comfortably back above 2.30 percent.
But the bullishness is not solely on Wall St and a combination of ebbing political risks alongside a punchy incoming earnings and economic numbers in Europe are seeing European bourses hit their highest in almost two years, with France’s CAC40 notching its highest intraday level in 10 years since Sunday’s first round of the French presidential election pointed to a victory for centrist Macron over far-right candidate Le Pen in May 7’s runoff.
Figures from Thomson Reuters Lipper showed that net flows into European mutual funds posted their third straight monthly inflow in March with up to $100 billion of inflows potentially in the pipeline. With just 35 STOXX600 companies having reported earnings for Q1, 57% of these beat estimates.
Banks have been leading the way this week, although Monday’s better-than-expected earnings from Credit Suisse were accompanied by plans for a $4 billion rights issue and its shares are marked down about 2 percent ahead of the open.
Otherwise, attention also now shifts to Thursday’s European Central bank meeting, which is expected to signal a steady policy course for now, but central bank sources told Reuters on Tuesday that the policymakers see scope for sending a small signal in June towards reducing monetary stimulus once the French election is out of the way.
Along with the heavy inflows to European equities and returning money to European peripheral debt, this helped push the euro even higher against the dollar over the past 24 hours, with the euro touching $1.0950 for the first time since November. Asian stock markets pushed higher overnight, led by further gains in Tokyo of more than 1 percent.
European stocks are expected to push higher again at the open. Brent crude was slightly lower, but held $52 in early trading.
Europe corp events: Credit Suisse, KPN, CapGemini sales, Santander, Standard Chartered, Raiffeisen, Daimler, Peugeot sales, Deutsche Boerse, LSE, Fiat Chrysler, GSK, CRH, Valeo, Boohoo