Ger30, UK100 and SP500 are CFD’s, written over the Dax30, Footsie100 and S&P500 Index futures:
In pre-opening, European markets were rehearsing bullish. Today’s session should be dominated by the results of the first round of the French presidential election. This resulted in two winners: Emmanuel Macron and Marine Le Pen. These two candidates obtained, respectively, 23.86% and 21.43% of the votes and will play the second round to be held on 7 May. This result is the scenario to which financial markets attributed a greater probability. Therefore, the positive reaction to these results is likely to be limited in extent and in time. During the Asian session, the Euro reached a high of the last five months, favored by the increase of the degree of confidence regarding the victory of Macron, a defender of the European Union. In fact, for the second round, investors, supported by the vast majority of polls, estimate a comfortable victory for Emmanuel Macron, however, the occurrence of possible terrorist attacks could favor the rhetoric of the far-right candidate.
Last Friday, the US market ended in negative territory, with investors expecting the outcome of the presidential election in France and reacting to the reported business results. In addition, the session was also influenced by the fall in oil prices and President Donald Trump’s statements on tax reform. In the Dow Jones index, IBM was the biggest contributor to the losses (-1.18%) after disclosure of its results. This index temporarily reversed into positive territory, after Donald Trump said that his administration will carry out a “massive tax cut” under a new tax reform, although the timing of this program is still unclear. In terms of economic indicators, sales of used houses increased by 4.40% in March, reaching an annual rate of 5.71 million (vs. 5.63 million expected), the fastest since February 2007 and 5.90% higher than the previous year.
The behavior of the Asian markets was dictated by the reaction to the French elections. Most markets traded positively, although the Chinese reversed this trend, eventually losing more than 1%. Tomorrow, the focus should be on North Korea. Today, Army Day is celebrated here, when Kim Il-sung (grandmother of the current North Korean leader) founded the guerrilla movement to fight the Japanese invaders. Pentagon strategists believe this is a likely date for a ballistic test especially considering the failure of the last test.