France: Clouds lift over Europe after Macron wins presidency – Danske Banks

The research team at Danske Bank explains that Macron has won by a very wide margin and the focus now turns to his choice of PM and cabinet followed by the parliamentary election; there are upside risk to EUR/USD as focus turns to the ECB and the big winner in euro FI is likely to be Italy which has lagged the periphery

Key Quotes

“In the final run-off of France’s presidential election, independent Emmanuel Macron defeated the Front National’s Marine Le Pen with 66.1% of the vote against 33.9%. Scoring below 40% was a clear disappointment for the Front National and after conceding defeat, Le Pen called for a deep transformation of the party, also hinting at possible renaming.”

“Macron’s margin of victory was even greater than opinion polls had projected, strengthening his ability to enlist support from Republican and Socialist deputies for the upcoming parliamentary elections. However, second round participation at 74.6% was the lowest since 1969, indicating widespread voter disillusionment and Macron’s first challenge will be to reconcile the politically divided country over his presidency. Markets will now watch out for Macron’s choice of prime minister and cabinet, which he has promised to announce once sworn into office on 14 May.”

“Focus will shift to parliamentary elections in June

The next key event in the election timeline will be the parliamentary elections for the National Assembly to be held from 11-18 June under a similar two-round voting system as in the presidential election. The National Assembly is the main legislative body, as it takes prominence over the Senate in law making, and has the power to take down the government in a no-confidence vote. How much of his policy proposals Emmanuel Macron can actually implement will therefore depend on how many seats his movement En Marche! (EM) can secure in the election.”