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French elections boost equities

European equity markets are in positive territory this morning as the political success of Emmanuel Macron in France has boosted investor confidence.

Mr Macron was tipped to gain a majority and that he did, and traders welcomed the news as political stability in Europe is a welcome change.

Homebuilders like Bellway, Persimmon, Barratt Development and Taylor Wimpey are all higher on the day even though the latest house price survey from Rightmove showed that asking prices fell in June. The decline of 0.4% was blamed on lower wage growth and the political uncertainty due to the Conservatives losing their majority. 

The pound is higher against the US dollar and the euro as Brexit talks begin in Brussels today. Brexit Secretary, David Davis, is aiming for a ‘deal like no other in history’, and he is confident it can be achieved. Traders are mindful it is going to be a long and drawn out process, and that striking the right balance between diplomacy and financial sensibility must be struck. 

The EUR/USD rallied in the early part of the morning but since then has reversed its gains. The news that Emmanuel Macron’s party, La Republique en Marche, secured a majority in the national assembly bodes well for the single currency.   

We are expecting the Dow Jones to open 68 points higher at 21,452, and we are anticipating the S&P 500 to open at 2440, up 7 points. Federal Reserve Bank of New York President William Dudley is due to speak in Plattsburgh at 1pm. 

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Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.