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Euro hits three-week high as French election looms – business live Euro hits three-week high as French election looms – business live
(about 1 hour later)
2.06pm BST
14:06
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.
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.
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.
Updated
at 2.15pm BST
2.05pm BST
14:05
Every politician should have a party trick, and Emmanuel Macron has just tweeted his....
Voilà. pic.twitter.com/KSd8XHgGtY
1.55pm BST
13:55
Here’s a lookback at the Harris opinion poll over the last couple of of months:
France update 4: New @harrisint_fr poll shows…Macron 25 percentLe Pen 22Fillon 19Mélenchon 19https://t.co/Y6yUJq46e1 pic.twitter.com/pAPfrKkDc8
1.10pm BST1.10pm BST
13:1013:10
The pound is still having a solid enough day, up 0.2% at $1.28.The pound is still having a solid enough day, up 0.2% at $1.28.
That’s more than two cents higher than Monday morning, before the snap election news. But Robin Bew of the Economist Intelligence Unit isn’t impressed:That’s more than two cents higher than Monday morning, before the snap election news. But Robin Bew of the Economist Intelligence Unit isn’t impressed:
Uptick in pound driven by hopes bigger Tory majority = softer #Brexit. But small beer compared to June slide. #UK still greatly marked downUptick in pound driven by hopes bigger Tory majority = softer #Brexit. But small beer compared to June slide. #UK still greatly marked down
1.02pm BST1.02pm BST
13:0213:02
Some analysts think investors are too relaxed about the French election.Some analysts think investors are too relaxed about the French election.
The FT’s Mehreen Khan explains:The FT’s Mehreen Khan explains:
“Markets are unprepared for the worst,” notes Athanasios Vamvakidis at Bank of America Merrill Lynch.“Markets are unprepared for the worst,” notes Athanasios Vamvakidis at Bank of America Merrill Lynch.
“The worst outcome for markets is if Le Pen and Mélenchon are in the second round, in our view, as markets could start pricing Frexit risks”“The worst outcome for markets is if Le Pen and Mélenchon are in the second round, in our view, as markets could start pricing Frexit risks”
Investors are still too complacent over the risks to the euro from France's four-horse election race, warn analysts https://t.co/72HUGHuKwg pic.twitter.com/V61rLzjNHZInvestors are still too complacent over the risks to the euro from France's four-horse election race, warn analysts https://t.co/72HUGHuKwg pic.twitter.com/V61rLzjNHZ
12.48pm BST12.48pm BST
12:4812:48
Fillon’s late revival in the polls could increase the chances that Marine Le Pen fails to win a place in the final run-off.Fillon’s late revival in the polls could increase the chances that Marine Le Pen fails to win a place in the final run-off.
That could trigger a surge in the euro and in share prices, believes Kathleen Brooks of City Index. She says a Macron-Fillon playoff would be the most ‘market-friendly’ option.That could trigger a surge in the euro and in share prices, believes Kathleen Brooks of City Index. She says a Macron-Fillon playoff would be the most ‘market-friendly’ option.
A win for Macron with Fillon in second place would restore faith in centrist politics, which has been eroded ever since last year’s Brexit vote in the UK and Trump’s triumph in the US Presidential election. The eradication of the Far Left and the Far Right candidates in the first round would likely see a collective sigh of relief that it is politics as usual in France. This combination for the second round could unleash a surge in the Cac, a sharp drop in French bond yields and a decent move higher in EUR/USD back towards 1.10, we could also see EUR/GBP recover back towards 0.8570 – a cluster of key resistance levels.A win for Macron with Fillon in second place would restore faith in centrist politics, which has been eroded ever since last year’s Brexit vote in the UK and Trump’s triumph in the US Presidential election. The eradication of the Far Left and the Far Right candidates in the first round would likely see a collective sigh of relief that it is politics as usual in France. This combination for the second round could unleash a surge in the Cac, a sharp drop in French bond yields and a decent move higher in EUR/USD back towards 1.10, we could also see EUR/GBP recover back towards 0.8570 – a cluster of key resistance levels.
Overall, there is a chance that the market has been wrong-footed once again by the polls, and Le Pen is not guaranteed a spot in the second round. If we are correct, then the political premium that has kept the euro range bound in recent months could evaporate, allowing the single currency to stage a decent rally on the back of a victory for the two moderate, pro EU candidates on Sunday night.Overall, there is a chance that the market has been wrong-footed once again by the polls, and Le Pen is not guaranteed a spot in the second round. If we are correct, then the political premium that has kept the euro range bound in recent months could evaporate, allowing the single currency to stage a decent rally on the back of a victory for the two moderate, pro EU candidates on Sunday night.
12.07pm BST12.07pm BST
12:0712:07
One of the more surprising elements of the French election is Francois Fillon’s recent revival.One of the more surprising elements of the French election is Francois Fillon’s recent revival.
After unexpectedly winning the Republican nomination, Fillon’s campaign was badly hurt by allegations that his wife had been paid for work she’d not done.After unexpectedly winning the Republican nomination, Fillon’s campaign was badly hurt by allegations that his wife had been paid for work she’d not done.
The Penelope Affair, followed by questions over gifts and consultancy fees, seemed likely to sink Fillon’s chances, and his plans for Thatcherite free market reforms.The Penelope Affair, followed by questions over gifts and consultancy fees, seemed likely to sink Fillon’s chances, and his plans for Thatcherite free market reforms.
But instead, he’s been regaining ground - and could yet claim a top-two finish on Sunday.But instead, he’s been regaining ground - and could yet claim a top-two finish on Sunday.
If that happens, Fillon can thank his core support, and his move towards increasingly populist, right-wing policies.If that happens, Fillon can thank his core support, and his move towards increasingly populist, right-wing policies.
My colleague Jon Henley explains:My colleague Jon Henley explains:
Born in the traditionally Catholic Sarthe department west of Paris, Fillon is the son of a history professor mother and solicitor father. With Penelope, whom he met in Le Mans when she was a student on a year abroad, he has raised five children in a 12th-century chateau.Born in the traditionally Catholic Sarthe department west of Paris, Fillon is the son of a history professor mother and solicitor father. With Penelope, whom he met in Le Mans when she was a student on a year abroad, he has raised five children in a 12th-century chateau.
He has abstained or voted against laws on equality between men and women and same-sex marriage and is personally opposed to abortion, though he would not try to repeal the 1975 law that legalised it in France.He has abstained or voted against laws on equality between men and women and same-sex marriage and is personally opposed to abortion, though he would not try to repeal the 1975 law that legalised it in France.
A year after he was first elected as France’s youngest MP, he opposed the 1982 law that effectively legalised homosexuality. A centre-right gay rights group, GayLib, has described his vision of French society as “clearly hostile to LGBT people”.A year after he was first elected as France’s youngest MP, he opposed the 1982 law that effectively legalised homosexuality. A centre-right gay rights group, GayLib, has described his vision of French society as “clearly hostile to LGBT people”.
Fillon has pledged to defend France’s “Christian values”. He would ban medically assisted procreation and use of sperm donors for single women and same-sex couples, and reverse some gay adoption rights.Fillon has pledged to defend France’s “Christian values”. He would ban medically assisted procreation and use of sperm donors for single women and same-sex couples, and reverse some gay adoption rights.
He has also promised to set annual quotas on immigration, restrict foreigners’ rights to French nationality, set the age of criminal responsibility at 16, build 16,000 new prison cells and, in foreign policy, develop more positive ties with Russia.He has also promised to set annual quotas on immigration, restrict foreigners’ rights to French nationality, set the age of criminal responsibility at 16, build 16,000 new prison cells and, in foreign policy, develop more positive ties with Russia.
The closing days of the campaign have seen Fillon more openly courting a hard-right vote, evoking France’s sovereignty and identity and promising at his Lille rally to crack down hard on immigration and pursue a zero-tolerance policy on radical Islam.The closing days of the campaign have seen Fillon more openly courting a hard-right vote, evoking France’s sovereignty and identity and promising at his Lille rally to crack down hard on immigration and pursue a zero-tolerance policy on radical Islam.
UpdatedUpdated
at 12.12pm BSTat 12.12pm BST
11.53am BST11.53am BST
11:5311:53
The candidates to become France’s next president have been campaigning for months, including a major TV debate earlier this month.The candidates to become France’s next president have been campaigning for months, including a major TV debate earlier this month.
But many voters are still uncertain of who they’ll vote for, and their choices could decide the election.But many voters are still uncertain of who they’ll vote for, and their choices could decide the election.
Mihir Kapadia, CEO and Founder of Sun Global Investments, says:Mihir Kapadia, CEO and Founder of Sun Global Investments, says:
The French election looks very close. Although Macron and Le Pen are expected to make it to the second round, all four candidates are close and 30% of voters are said to be still undecided as ahead of Sunday’s vote. Two interesting weeks ahead in France.”The French election looks very close. Although Macron and Le Pen are expected to make it to the second round, all four candidates are close and 30% of voters are said to be still undecided as ahead of Sunday’s vote. Two interesting weeks ahead in France.”
Pollsters have reported that the number of uncommitted French voters is at unprecedented level.Pollsters have reported that the number of uncommitted French voters is at unprecedented level.
This chart, from Teneo Intelligence, shows how last minute changes of heart could boost, or undermine, the leading candidates:This chart, from Teneo Intelligence, shows how last minute changes of heart could boost, or undermine, the leading candidates:
11.16am BST11.16am BST
11:1611:16
The “nightmare scenario” for global financial markets is second-round duel between the equally sharp-tongued Le Pen and Melenchon, says Associated Press’s John Leicester.The “nightmare scenario” for global financial markets is second-round duel between the equally sharp-tongued Le Pen and Melenchon, says Associated Press’s John Leicester.
Victory for either could, in the wake of the Brexit vote, possibly deliver a knockout punch to the EU ambition of ever-closer union among the peoples of Europe because both want to tear up agreements that bind together the 28 EU states.Victory for either could, in the wake of the Brexit vote, possibly deliver a knockout punch to the EU ambition of ever-closer union among the peoples of Europe because both want to tear up agreements that bind together the 28 EU states.
Melenchon says “the Europe of our dreams is dead.” He proposes “disobeying treaties from the moment we take power” and negotiating new EU rules followed by a referendum on whether France should leave the bloc it helped found. “We either change the EU or quit it,” Melenchon’s manifesto says.Melenchon says “the Europe of our dreams is dead.” He proposes “disobeying treaties from the moment we take power” and negotiating new EU rules followed by a referendum on whether France should leave the bloc it helped found. “We either change the EU or quit it,” Melenchon’s manifesto says.
The “totalitarian” EU has also long been one of Le Pen’s pet hates and constant target for her virulent nationalist discourse. She wants an in-out referendum on France’s EU membership, a new French franc to replace the common euro currency, and re-imposing French borders to staunch what she describes as out-of-control immigration.The “totalitarian” EU has also long been one of Le Pen’s pet hates and constant target for her virulent nationalist discourse. She wants an in-out referendum on France’s EU membership, a new French franc to replace the common euro currency, and re-imposing French borders to staunch what she describes as out-of-control immigration.
Like her father, National Front founder Jean-Marie Le Pen, in 2002, she hopes for an electoral coup by making the runoff. But pollsters suggest that, like him, she would likely lose on May 7 to any of the other top three opponents.Like her father, National Front founder Jean-Marie Le Pen, in 2002, she hopes for an electoral coup by making the runoff. But pollsters suggest that, like him, she would likely lose on May 7 to any of the other top three opponents.
UpdatedUpdated
at 11.37am BSTat 11.37am BST
10.51am BST10.51am BST
10:5110:51
French stock market is rallyingFrench stock market is rallying
Paris’s stock market is on track for its best day since the start of March.Paris’s stock market is on track for its best day since the start of March.
The CAC 40 has jumped by 1% today, outperforming the rest of Europe, as investors react to the latest forecasts of a Macron victory.The CAC 40 has jumped by 1% today, outperforming the rest of Europe, as investors react to the latest forecasts of a Macron victory.
Financial stocks are leading the rally, with BNP Paribas jumping 2.6% and Société Générale gaining 1.9%. Technology and consumer-focused stocks are also up.Financial stocks are leading the rally, with BNP Paribas jumping 2.6% and Société Générale gaining 1.9%. Technology and consumer-focused stocks are also up.
The FTSE 100 is lagging behind, though, partly due to the rise in the pound this morning.The FTSE 100 is lagging behind, though, partly due to the rise in the pound this morning.
Joshua Mahony, Market Analyst at IG, explains:Joshua Mahony, Market Analyst at IG, explains:
The FTSE is weakening once more this morning, as the pound continues its ascent in the wake of Theresa May’s decision to call a snap election in just seven weeks.The FTSE is weakening once more this morning, as the pound continues its ascent in the wake of Theresa May’s decision to call a snap election in just seven weeks.
To many the appreciation of the pound seems counter-intuitive, yet the prospect of a strengthened Tory majority means there is hope that this election could be good for the UK in Brexit negotiations.To many the appreciation of the pound seems counter-intuitive, yet the prospect of a strengthened Tory majority means there is hope that this election could be good for the UK in Brexit negotiations.
10.31am BST10.31am BST
10:3110:31
M&S isn’t the only UK retailer shutting stores.M&S isn’t the only UK retailer shutting stores.
Debenhams has announced plans to close up to 10 shops, and 11 warehouses, as new CEO Sergio Bucher gets to grips with its “tired and old” estate.Debenhams has announced plans to close up to 10 shops, and 11 warehouses, as new CEO Sergio Bucher gets to grips with its “tired and old” estate.
10.12am BST
10:12
UK's Green Investment Bank sold
Newsflash: The government has announced the sale of Britain’s Green Investment Bank to Australian bank Macquarie in a £2.3bn deal (as my colleague Adam Vaughan reported overnight).
It’s an unpopular move with environmental activists, who question Macquarie’s commitment to clean energy.
Dr Doug Parr, Policy Director at Greenpeace UK, says:
“At a time when the government should be shoring up low carbon industry for post-Brexit Britain, they have given away one of our key tools for advancing green technologies. The hole left by the Green Investment Bank will slow our transition to a clean energy system, set us back on reaching our climate targets, and mean more of the jobs from new sectors will go elsewhere.
If the government picks up its pace, the UK could be a world leader in renewable and green technology. But selling a great British success story, which levered private money into eco-projects, to a controversial Australian bank known for asset-stripping, is a disaster. We need investment in the booming clean technology industry in the UK, for skilled jobs, fairer bills and a healthy economy to see us through the next uncertain few years and in to the future.”
The FT’s Jim Pickard suspects the deal is being slipped out under the cover of election fever:
Breaking: £2.3bn sale of Green Investment Bank confirmed - good week to bury one of the most controversial privatisations of recent years.
9.56am BST
09:56
The euro is climbing higher, now up 0.5% to a new three-week high of $1.077.
That’s partly due to general dollar weakness, as well as that French opinion poll suggesting a win for Emmanuel Macron.
9.42am BST
09:42
Retail news: Marks & Spencer is shutting six UK stores, but promising staff that they’ll be offered new positions elsewhere.
M&S is to close 6 stores: Monks Cross, Portsmouth, Slough, Warrington, Wokingham and Worksop promises 380 staff 'guaranteed' redeployment
On the upside M&S also says 36 new stores to open over next six months creating 1,400 new jobs
Here’s the statement.
Updated
at 9.44am BST
9.37am BST
09:37
European stock markets will probably fall sharply if the French election delivers a shock result.
Marketwatch’s Sara Sjölin explains:
And here are the two-way risks: A win for either Le Pen or Melenchon would spark a selloff in risk assets and drive French and European equities down 5%-10% by the end of June, Citi said. However, if Macron or Fillon secures the presidency, stocks in Europe could see a 10%-20% rally before the end of the year, they said.
"Investors (and French voters) are getting worried about a ‘nightmare’ scenario" - French election is this Sundayhttps://t.co/DJFYKMNP29 pic.twitter.com/KPV1XOSOT7
9.15am BST
09:15
The pound is also strengthening this morning, up half a cent at $1.2825 against the US dollar.
Reuters’ Jamie McGeever has spotted signs that investors are more confident about UK assets.
The yield (or interest rate) on UK gilts (government debt) has fallen in recent weeks, for example, as the price of the bonds has risen.
Investors more sanguine on Brexit than at any point since Sept when May first adopted hard Brexit stance. Investors now buying GBP and gilts pic.twitter.com/kKQ3ipubIS
9.05am BST
09:05
Marine Le Pen’s best hope of victory would come in a run-off against former prime minister Francois Fillon, argues Antonio Barroso of Teneo Intelligence.
Barroso believes that many centrist and left-leaning voters might find this choice underwhelming, and not participate in such a second round scenario.
He writes:
The worst-case scenario in terms of a potential Le Pen victory is a runoff between Fillon and the leader of the National Front. This is especially the case considering the former PM’s recent “rightist turn” after he suggested he would include members of an ultra-catholic organization in his administration.
Combined with his frequent attacks on the judiciary, this will only make it more difficult for Fillon to credibly moderate his positions in between rounds. The risk is that center-left voters decide to stay at home on 7 May, allowing Le Pen to be elected by voter neglect rather than by voter endorsement.
Barroso also agrees that Macron would be a much tougher opponent for Le Pen.
8.54am BST
08:54
This chart confirms that traders have been anxious about the French elections, and the prospect of a eurosceptic winner:
As Sunday's 1st round of French election nears, one measure of euro volatility is well on track for its biggest weekly jump on record pic.twitter.com/As4mdjhyEZ
8.47am BST
08:47
Tactical voting will probaly keep Marine Le Pen out of the Élysée Palace, argues Kit Nicholl, country risk analyst at IHS Global Insight:
In a scenario where Le Pen is pitted against Fillon, or more likely, Macron, voters from the moderate left and right are likely to unite in a so-called “Republican front”, voting tactically to keep the FN out of power.
A Le Pen victory is therefore unlikely but still remains possible, particularly as abstention rates will also play a big role.
Furthermore, the occurrence of a major terrorist attack, widespread urban riots, or the disclosure of damning information aimed at discrediting Macron would all have the effect of significantly increasing the FN’s share of the vote.
8.37am BST
08:37
Euro hits three-week high
The euro has hit its highest level since the end of March this morning.
The single currency gained 0.3% against the US dollar to $1.074, after a new opinion poll suggested centrist candidate Emmanuel Macron will win the French election.
Harris Interactive placed Macron on 25% support ahead of Sunday’s first round of voting, ahead of Marine Le Pen (22%).
Republican candidate Francois Fillon (19%) and left-winger Jean-Luc Melenchon (also 19%) followed behind.
Il ya de nouveau UNE VRAI DYNAMIQUE MACRON "BERCY" Sondage HARRIS AUJOURD'HUI comme BVA hier et assurément ODOXA demain Mais IFOP a du MAL⬇️ pic.twitter.com/7HwMo3XuqW
Harris also see Macron comfortably beating Le Pen in the second round of voting in May.
#FRANCE'S MACRON TO BEAT LE PEN IN 2ND-ROUND 66% VS 34%: HARRIS - BBG
The euro has been under pressure from predictions that either Le Pen or Melenchon (or even both) might contest the run-off, as both are extremely critical of the EU and could potentially trigger Frexit.
I’ll pull together some reaction now....
8.20am BST
08:20
The agenda: Political worries linger
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Political issues continue to occupy the market’s attention today.
The first round of the French presidential election is just three days away, so investors are watching closely to see which candidates make it through to the run-off two weeks later.
The race looks rather tight, raising concerns that the eurozone could be dragged into another crisis if the more mainstream candidates stumble.
Neil Wilson of ETX Capital explains:
Volatility in the euro has peaked at its highest since before the June referendum as markets weigh the prospects of either Marine Le Pen or Jean-Luc Melenchon – or both - making the second round. The killer scenario for the euro would be if both candidates make the May 7th runoff as it would raise the very real possibility of France exiting the euro.
Current polling gives the nod to Macron and Le Pen, with Macron eventually winning. But with four candidates polling around 20% there is every reason for caution. We’re looking at contingency plans in the event of a Le Pen-Melenchon runoff as this would spark a big selloff in the euro and French government bonds, as well as bank stocks.
Britain’s general election also looms over the City, of course, as traders try to calculate the consequences. The latest front pages suggest Theresa May is determined to make Brexit the centrepoint of the campaign:
Ah yes, that 'softer' Brexit... pic.twitter.com/Rw7YDe5nKO
Overnight, Asian shares have been boosted by some solid trade data from Japan.
Exports jumped at the fastest pace in two years in March, raising hopes that rising demand from overseas could help the sluggish Japanese economy.
Good morning. Asia stocks strengthening on short covering into French election this weekend. Strong Japan trade data props up stock markets. pic.twitter.com/2ADGZyzBq0
There’s plenty of corporate news too, including results from Unilever, Debenhams, and Sky.
On the economics side, there’s eurozone construction figures at 10am BST, the weekly US unemployment report at 1.30pm, and eurozone consumer confidence stats at 3pm.