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| Euro hits three-week high and French shares jump as election looms – as it happened | Euro hits three-week high and French shares jump as election looms – as it happened |
| (7 months later) | |
| France’s stock market has surged today as excitement mounts ahead of Sunday’s presidential vote. | France’s stock market has surged today as excitement mounts ahead of Sunday’s presidential vote. |
| The CAC 40 outperformed other European indices to end the day 1.7% higher. Almost every share gained ground in a broad-based rally, led by financial companies and industrial firms. | The CAC 40 outperformed other European indices to end the day 1.7% higher. Almost every share gained ground in a broad-based rally, led by financial companies and industrial firms. |
| Shares were boosted by forecasts that independent candidate Emmanuel Macron would win the race to succeed Francois Hollande -- even though opinion polls should be treated with plenty of caution these days..... | Shares were boosted by forecasts that independent candidate Emmanuel Macron would win the race to succeed Francois Hollande -- even though opinion polls should be treated with plenty of caution these days..... |
| European equity markets surprisingly calm. Can you spot in which country a fateful election will take place in 3 days? pic.twitter.com/ttekmJRQ7e | European equity markets surprisingly calm. Can you spot in which country a fateful election will take place in 3 days? pic.twitter.com/ttekmJRQ7e |
| The euro has also held onto this morning’s gains, and is trading at a three-week high of $1.076 tonight. | The euro has also held onto this morning’s gains, and is trading at a three-week high of $1.076 tonight. |
| Joshua Mahony of IG says traders are pretty confident that Macron will win in the second round of voting, on May 8th. | Joshua Mahony of IG says traders are pretty confident that Macron will win in the second round of voting, on May 8th. |
| The stability we have seen in the markets today is a clear nod to the blasé outlook that the trading community is holding with regards to this weekend’s French election. | The stability we have seen in the markets today is a clear nod to the blasé outlook that the trading community is holding with regards to this weekend’s French election. |
| The first round is widely expected to result in a toss-up between Le Pen and Macron, but most expect voters to team up against Le Pen in the second round. The threat of an upset seems likely to be negated by the structure of the French democratic system. | The first round is widely expected to result in a toss-up between Le Pen and Macron, but most expect voters to team up against Le Pen in the second round. The threat of an upset seems likely to be negated by the structure of the French democratic system. |
| But could Francois Fillon spring a surprise? | But could Francois Fillon spring a surprise? |
| Marchel Alexandrovich of stockbroking firm Jefferies argues that Fillon’s popularity with older voters could be decisive: | Marchel Alexandrovich of stockbroking firm Jefferies argues that Fillon’s popularity with older voters could be decisive: |
| For example, one of the latest French polls with a demographic breakdown shows two things: the older voters are more likely to vote, and they still overwhelmingly support Fillon. In fact no candidate carries as much support with any demographic group as Fillon does with the over 65s. | For example, one of the latest French polls with a demographic breakdown shows two things: the older voters are more likely to vote, and they still overwhelmingly support Fillon. In fact no candidate carries as much support with any demographic group as Fillon does with the over 65s. |
| And what if Marine Le Pen, or the far-left’s Jean-Luc Mélenchon, defied the experts? | And what if Marine Le Pen, or the far-left’s Jean-Luc Mélenchon, defied the experts? |
| Daniel Christen of Capital Economics explains how a shock result would reignite the eurozone crisis: | Daniel Christen of Capital Economics explains how a shock result would reignite the eurozone crisis: |
| If either Le Pen or Mélenchon were to become the next president, there could be a big reaction in the markets. France’s sovereign credit spread would probably surge as fears over her creditworthiness rose. And in our view, it is likely that the euro would fall. Unlike a potential “Grexit”, a “Frexit” would pose an existential threat to the common currency. Even if investors thought that a “Frexit” wouldn’t occur any time soon, the two candidates’ views on monetary policy might be enough to make investors shy away from holding euros. | If either Le Pen or Mélenchon were to become the next president, there could be a big reaction in the markets. France’s sovereign credit spread would probably surge as fears over her creditworthiness rose. And in our view, it is likely that the euro would fall. Unlike a potential “Grexit”, a “Frexit” would pose an existential threat to the common currency. Even if investors thought that a “Frexit” wouldn’t occur any time soon, the two candidates’ views on monetary policy might be enough to make investors shy away from holding euros. |
| And that’s all for tonight. Thanks for reading and commenting. GW | And that’s all for tonight. Thanks for reading and commenting. GW |
| A reminder, from Sky News, of how close the French election looks: | A reminder, from Sky News, of how close the French election looks: |
| The Economist has just backed Emmanuel Macron for the French presidency. | The Economist has just backed Emmanuel Macron for the French presidency. |
| It argues that the centrist candidate can break the mould of French politics and push through reforms to improve the French economy. | It argues that the centrist candidate can break the mould of French politics and push through reforms to improve the French economy. |
| It’s not really a surprise. But here’s a flavour of the Economist’s argument: | It’s not really a surprise. But here’s a flavour of the Economist’s argument: |
| Mr Macron is untainted, if only because he is a political outsider. He has never held elected office, though he was the appointed economy minister in the present government. His plans are less bold than Mr Fillon’s, cutting only 120,000 public jobs and €60bn in spending, but an independent study rates them as equally free-market. Mr Macron is pro-business, but more subtle about it. Instead of abolishing the 35-hour week, he would help companies work around it. Rather than raise the retirement age, he would unify the country’s 35 pension schemes, eventually doing more to enhance labour mobility. | Mr Macron is untainted, if only because he is a political outsider. He has never held elected office, though he was the appointed economy minister in the present government. His plans are less bold than Mr Fillon’s, cutting only 120,000 public jobs and €60bn in spending, but an independent study rates them as equally free-market. Mr Macron is pro-business, but more subtle about it. Instead of abolishing the 35-hour week, he would help companies work around it. Rather than raise the retirement age, he would unify the country’s 35 pension schemes, eventually doing more to enhance labour mobility. |
| Mr Macron is more outward-looking, too. He backs recent EU free-trade deals that Mr Fillon rejects. He is more likely to be able to work with Germany to strengthen the governance of the euro. He is socially liberal, whereas his opponent, close to Roman Catholic traditionalists, opposed gay marriage and wants to limit gay adoption. Mr Fillon would impose immigration quotas and end sanctions against Russia; Mr Macron exhorts the French to live up to their values. | Mr Macron is more outward-looking, too. He backs recent EU free-trade deals that Mr Fillon rejects. He is more likely to be able to work with Germany to strengthen the governance of the euro. He is socially liberal, whereas his opponent, close to Roman Catholic traditionalists, opposed gay marriage and wants to limit gay adoption. Mr Fillon would impose immigration quotas and end sanctions against Russia; Mr Macron exhorts the French to live up to their values. |
| The worry is that Mr Macron will not get his reforms through the legislature. Though En Marche!, the party he founded, will run in every constituency in elections to the National Assembly in June, it will struggle to win a majority, unlike Mr Fillon’s Republicans. But do not write off his political skills. In rallies and on TV he has more than held his own. En Marche! is barely a year old, but it has 250,000 members—more than twice as many as the Socialists. | The worry is that Mr Macron will not get his reforms through the legislature. Though En Marche!, the party he founded, will run in every constituency in elections to the National Assembly in June, it will struggle to win a majority, unlike Mr Fillon’s Republicans. But do not write off his political skills. In rallies and on TV he has more than held his own. En Marche! is barely a year old, but it has 250,000 members—more than twice as many as the Socialists. |
| His critics say Mr Macron is wishy-washy. But he is the only candidate who has made a full-blooded case for the open society and economy this newspaper believes in. That takes courage—the courage to step outside France’s party system, to defend complex arguments against polarising sound bites and to stand for optimism in an age of identity politics. That is a message all democracies need to hear. | His critics say Mr Macron is wishy-washy. But he is the only candidate who has made a full-blooded case for the open society and economy this newspaper believes in. That takes courage—the courage to step outside France’s party system, to defend complex arguments against polarising sound bites and to stand for optimism in an age of identity politics. That is a message all democracies need to hear. |
| More here. | More here. |
| A consequential choice for France—and an uncertain one | A consequential choice for France—and an uncertain one |
| The Economist’s Tom Nuttall tweets: | The Economist’s Tom Nuttall tweets: |
| Our cover this week. pic.twitter.com/GynxZc4Ve6 | Our cover this week. pic.twitter.com/GynxZc4Ve6 |
| Encouraging news. Consumer confidence in the eurozone has risen to a 25-month high. | Encouraging news. Consumer confidence in the eurozone has risen to a 25-month high. |
| It’s another sign that the European economy is strengthening. | It’s another sign that the European economy is strengthening. |
| April Eurozone Consumer Confidence Strengthens To -3.6, Close To 9-Year Highshttps://t.co/3TUbrPIUq7$EURUSD #forex #forextrading #Eurozone pic.twitter.com/juhwiAeqwe | April Eurozone Consumer Confidence Strengthens To -3.6, Close To 9-Year Highshttps://t.co/3TUbrPIUq7$EURUSD #forex #forextrading #Eurozone pic.twitter.com/juhwiAeqwe |
| Back in Washington, Christine Lagarde has also taken a swing at Germany’s trade surplus, saying the country’s external imbalances should be addressed. | Back in Washington, Christine Lagarde has also taken a swing at Germany’s trade surplus, saying the country’s external imbalances should be addressed. |
| .@Lagarde on Germany: we have consistently said external imbalance should be addressed. Part of surplus is justifiable, but not all of it. pic.twitter.com/NUSGAqLh14 | .@Lagarde on Germany: we have consistently said external imbalance should be addressed. Part of surplus is justifiable, but not all of it. pic.twitter.com/NUSGAqLh14 |
| Germany posted a current account surplus of €253bn, or over 8% of GDP; critics want it to spend, borrow and import more to bring this surplus down. | Germany posted a current account surplus of €253bn, or over 8% of GDP; critics want it to spend, borrow and import more to bring this surplus down. |
| The latest unemployment figures from America show that the US labo(u)r market remains pretty strong. | The latest unemployment figures from America show that the US labo(u)r market remains pretty strong. |
| The number of new applications for jobless benefit rose by 10,000 last week, to 244,000 - well below the 300,000 threshold that shows a healthy jobs market. | The number of new applications for jobless benefit rose by 10,000 last week, to 244,000 - well below the 300,000 threshold that shows a healthy jobs market. |
| But the continuing claims figure, a wider measure of unemployment, is at its lowest level since 2000. | But the continuing claims figure, a wider measure of unemployment, is at its lowest level since 2000. |
| Number of people collecting unemployment checks hits 17-year low, jobless claims show https://t.co/nkGKnwGPFY pic.twitter.com/HO7CLiQBkq | Number of people collecting unemployment checks hits 17-year low, jobless claims show https://t.co/nkGKnwGPFY pic.twitter.com/HO7CLiQBkq |
| An upbeat-sounding Christine Lagarde has launched this week’s Spring Meeting by calling for a new push for innovation, closer trade ties and a clampdown on tax evasion. | An upbeat-sounding Christine Lagarde has launched this week’s Spring Meeting by calling for a new push for innovation, closer trade ties and a clampdown on tax evasion. |
| .@Lagarde: Spring is in the air and the economy as well. Finally seeing economy picking up momentum https://t.co/uWRsfqSKPZ #IMFMeetings | .@Lagarde: Spring is in the air and the economy as well. Finally seeing economy picking up momentum https://t.co/uWRsfqSKPZ #IMFMeetings |
| We need to make sure momentum is sustained and growth is shared more equitably- .@Lagarde at presser | We need to make sure momentum is sustained and growth is shared more equitably- .@Lagarde at presser |
| .@Lagarde at #IMFMeetings: We need to reinvigorate productivity by boosting trade and innovation | .@Lagarde at #IMFMeetings: We need to reinvigorate productivity by boosting trade and innovation |
| .@Lagarde: stronger cooperation between countries can help reduce imbalances, reduce tax evasion, progress toward SDGs pic.twitter.com/5xbiDn9Hr8 | .@Lagarde: stronger cooperation between countries can help reduce imbalances, reduce tax evasion, progress toward SDGs pic.twitter.com/5xbiDn9Hr8 |
| .@Lagarde: Growth potential still needs a lot if work; policymakers need to focus on this area. | .@Lagarde: Growth potential still needs a lot if work; policymakers need to focus on this area. |
| The Greek government is hoping to make progress in its negotiations with creditors at the IMF Spring meeting this week. | The Greek government is hoping to make progress in its negotiations with creditors at the IMF Spring meeting this week. |
| The country’s finance minister, national economy minister and deputy finance minister are all flying to Washington today for crucial debt talks, including with Fund chief Christine Lagarde. | The country’s finance minister, national economy minister and deputy finance minister are all flying to Washington today for crucial debt talks, including with Fund chief Christine Lagarde. |
| Helena Smith reports from Athens | Helena Smith reports from Athens |
| Greek officials say the all-important issue of debt – and ways to reduce it – will be at the core of talks the finance and national economy ministers, Euclid Tskalotos and Dimitris Papadimitriou, will have in Washington. | Greek officials say the all-important issue of debt – and ways to reduce it – will be at the core of talks the finance and national economy ministers, Euclid Tskalotos and Dimitris Papadimitriou, will have in Washington. |
| Tsakalotos, whose first meeting will be with IMF managing director Christine Lagarde on Friday, is hoping that the framework of a debt relief deal can be secured in time for the next Eurogroup meeting of single currency finance ministers on May 22. | Tsakalotos, whose first meeting will be with IMF managing director Christine Lagarde on Friday, is hoping that the framework of a debt relief deal can be secured in time for the next Eurogroup meeting of single currency finance ministers on May 22. |
| Athens’ leftist-led government, in a sop to sceptical MPs unnerved by the prospect of further pension cuts and tax increases - concessions made to conclude the long-stalled compliance review at the heart of the country’s latest standoff with creditors - has threatened the measures won’t be implemented if a debt relief deal isn’t cut first even if the unpopular policies aren’t due to be enforced until 2019. | Athens’ leftist-led government, in a sop to sceptical MPs unnerved by the prospect of further pension cuts and tax increases - concessions made to conclude the long-stalled compliance review at the heart of the country’s latest standoff with creditors - has threatened the measures won’t be implemented if a debt relief deal isn’t cut first even if the unpopular policies aren’t due to be enforced until 2019. |
| Auditors representing Greece’s bailout lenders are expected to return to Athens next week to complete the technical aspects of the review before a staff level agreement is finally wrapped up. Parliament would then legislate the measures before a comprehensive deal, including medium-term debt relief measures, are put before the Eurogroup of finance minister. | Auditors representing Greece’s bailout lenders are expected to return to Athens next week to complete the technical aspects of the review before a staff level agreement is finally wrapped up. Parliament would then legislate the measures before a comprehensive deal, including medium-term debt relief measures, are put before the Eurogroup of finance minister. |
| But as ever nothing is quite as easy as it seems. The IMF, which only this week said it could not participate in the latest bailout programme unless Greece’s debt burden became manageable, projected the country’s primary surplus would be just 2% in 2018, well short of its target of 3.5%. That once again leaves the door wide open for renewed friction between the Fund and euro area member states not least Germany which has made IMF participation a condition of further loan disbursements. | But as ever nothing is quite as easy as it seems. The IMF, which only this week said it could not participate in the latest bailout programme unless Greece’s debt burden became manageable, projected the country’s primary surplus would be just 2% in 2018, well short of its target of 3.5%. That once again leaves the door wide open for renewed friction between the Fund and euro area member states not least Germany which has made IMF participation a condition of further loan disbursements. |
| In forecasts issued late Wednesday, the IMF attributed Athens’ bigger- than-expected primary surplus of 3.3 percent in 2016 to “temporary factors.” Greece’s economic recovery is hanging by a thread with many fearing it could be thrown into reverse unless a deal is reached and the uncertainty is ended given the country’s tight €7.5bn debt repayment deadline early July. | In forecasts issued late Wednesday, the IMF attributed Athens’ bigger- than-expected primary surplus of 3.3 percent in 2016 to “temporary factors.” Greece’s economic recovery is hanging by a thread with many fearing it could be thrown into reverse unless a deal is reached and the uncertainty is ended given the country’s tight €7.5bn debt repayment deadline early July. |
| But speaking to reporters today, Greece’s government spokesman said the country’s extraordinary over-performance “finally noted by the Fund” would determine the fiscal path it would take once its current 86 bn euro bailout programme ended in September 2018. | But speaking to reporters today, Greece’s government spokesman said the country’s extraordinary over-performance “finally noted by the Fund” would determine the fiscal path it would take once its current 86 bn euro bailout programme ended in September 2018. |
| The government’s over-arching aim was for primary surpluses to be reduced, he said, so that the Greek economy could regain its potential and achieve the highest possible rates of growth. | The government’s over-arching aim was for primary surpluses to be reduced, he said, so that the Greek economy could regain its potential and achieve the highest possible rates of growth. |
| Over in Washington, world finance ministers and top central bankers are gathering to discuss the state of the global economy. | Over in Washington, world finance ministers and top central bankers are gathering to discuss the state of the global economy. |
| Top of the agenda at the IMF/World Bank Spring Meeting will be the new US government, and its protectionist trade policies. | Top of the agenda at the IMF/World Bank Spring Meeting will be the new US government, and its protectionist trade policies. |
| Reuters has more details: | Reuters has more details: |
| “These meetings will all be about Trump and the implications of his policies for the international agenda,” said Domenico Lombardi, a former IMF board official who is now with the Centre for International Governance Innovation, a Canadian think-tank. | “These meetings will all be about Trump and the implications of his policies for the international agenda,” said Domenico Lombardi, a former IMF board official who is now with the Centre for International Governance Innovation, a Canadian think-tank. |
| He added that IMF Managing Director Christine Lagarde is aiming to “socialize” the new administration to the IMF’s agenda and influence its policy choices. | He added that IMF Managing Director Christine Lagarde is aiming to “socialize” the new administration to the IMF’s agenda and influence its policy choices. |