LONDON French presidential candidates Emmanuel Macron and Marine Le Pen go head-to-head tonight in a television debate, with polls still showing Macron beating Le Pen by a rough 60-40 margin in Sunday's deciding round.
That said, Macron's ability to pull in support from across the political spectrum remains an open question: only one-third of members of far-left politician Jean-Luc Melenchon's political movement will cast their ballot for him, one survey showed, with the remainder planning to cast a blank vote or abstain.
After days of mixed messages about ditching the euro, Le Pen made clear in a Reuters interview on Tuesday that she wanted to take France out of the single currency. In an effort to reassure savers about a run on banks that would destroy their assets, Le Pen also said she would consider capital controls if needed.
Meanwhile the PR battle between London and Brussels on Brexit continues with Brexit minister David Davis shooting down an FT report suggesting that Brussels has raised the gross bill which Britain will have to pay on leaving to 100 billion euros. Various figures have been floating around (this one is in contrast to a widely cited net figure of 60 billion euros) and there have been indications that EU27 countries have in recent weeks hardened their demands of Britain.
More clarity may be on offer at EU Brexit negotiator Michel Barnier's 0900 GMT news conference on his negotiation guidelines.
Financial markets are slightly nervous ahead of the 0830 GMT publication of the monthly purchasing managers' index (PMI) for the manufacturing sector, which is seen slowing a touch - but staying well above the 50 mark that separates growth from contraction. Across the Channel, meanwhile, German unemployment is expected to show a further fall for April and euro zone first-quarter GDP growth seen accelerating slightly to 0.5 percent versus 0.4 percent in the previous quarter.
MARKETS AT 0655 GMT
The charge higher in equities this holiday-strewn week has seen the MSCI World index of stock markets around the globe notch off another record high in early trading, even though Apple’s underwhelming iPhone sales readout after the bell late Tuesday saw its stock come off about 1 percent and equities in general may level off Wednesday as a result.
With first annual earnings growth both in the United States and Europe now coming in close to 14 percent, it’s not hard to see why equities are up here. But the incoming economic soundings for the second quarter so far make for less cheery reading, in the United States at least.
Misses on the big April business surveys were compounded overnight by news of a drop in auto sales at GM, Ford and Toyota last month, data that saw GM and Ford share prices drop 3-4 pct. Along with the poor headline U.S. Q1 GDP growth number from last week, this underlines why there’s virtually no expectation of another interest rate rise from the U.S. Federal Reserve when it announces its latest policy decision later on Wednesday.
A bigger question now is whether futures market pricing showing a 61 percent chance of another rate hike in June is overcooked too. The ADP U.S. private sector jobs report for April out later will tell a tale in that regard. The dollar was steady overnight but 10-year Treasury yields have slipped back below 2.30 percent.
For Europe, the big question is whether the euro zone’s economic outperformance can continue. If consensus forecasts are correct, GDP numbers out later on Wednesday will show that at an annualised 2.0 percent the euro area grew almost three times as fast as the United States during the first three months of the year.
What’s more, economic surprise indices continue to push higher into positive territory there in April while U.S. equivalents have plunged into negative territory. This will be key for investors as political uncertainty lifts after Sunday’s final runoff in the French Presidential election, as long as centrist Macron sustains his 20-percentage point opinion poll lead over far-right candidate Le Pen. The final televised between the two is due later on Wednesday night.
After scaling new 20-month highs in the previous session, European shares are set to slip slightly at the open on Wednesday. A steady stream of corporate results will drive individual moves and could push benchmarks to new highs.