The euro failed to get a boost from pro-EU Emmanuel Macron’s re-election as France’s president, with European stock futures tumbling, as investors’ concerns about global growth overshadowed their relief at the defeat of far-right candidate Marine Le Pen.
Macron’s victory: Avoiding a political earthquake
French President Emmanuel Macron defeated far-right rival Marine Le Pen by a comfortable margin in Sunday’s election to win a second term and end what would have been a political earthquake.
Estimates of France’s five major opinion polls showed Macron receiving more than 57 percent of the vote in today’s run-off, compared to 42 percent for Le Pen, making the 44-year-old centrist the first winner of a second presidential term since Former President Jacques Chirac two decades ago.
Macron has leaned on a pro-business and European Union platform, bolstering the European bloc in the midst of the worst security crisis in decades.
The current results are good news for investors who had predicted that Le Pen’s victory would shock markets similar to what happened with the UK’s vote to leave the European Union or the election of Donald Trump in the US.
France’s economic slowdown
Macron’s victory comes as France’s economy slowed more than previously expected, with the industry grappling with rising energy costs and worsening supply constraints as a result of Russia’s invasion of Ukraine, according to the French Central Bank’s monthly report.
Investors remain concerned about whether the global economy can withstand the tightening of a number of major central banks, notably the Federal Reserve, slowing Chinese growth due to the Covid lockdown as well as the impact of the ongoing Russo-Ukrainian war.
European markets
“Reuters” reported that the pan-Euro Stoxx 50 futures contract fell 1.75 percent in Asian trading on Monday morning, along with a decline in futures contracts in the US and Asian stocks.
The euro, which initially opened higher, fell 0.34 percent against the dollar to $1.07725, approaching a two-year low last week.
French stocks closed nearly 2 percent lower on Friday, and the Euro Stoxx 600 index closed 1.8 percent lower, as interest rate hike tensions weighed on global equities.
Bond markets were already moving ahead of the election, and the yield premium demanded by investors for holding French 10-year bonds against the German European benchmark index – a key gauge of relative risk – fell to a three-week low of around 42 basis points Friday as investors expected Macron to win.