DAX Dips After Brief Bounce From Macron Win

The DAX has edged lower on Monday and is currently trading at 12,684.25.  On Sunday, Emmanuel Macron easily defeated Marie Le Pen to win the French presidential election. On the release front, there are no major events out of the eurozone. There was some positive news in the eurozone, as German Factory Orders gained 1.0%, above the forecast of 0.7%. As well, Eurozone Sentix Investor Confidence climbed to 27.4, beating the estimate of 25.3 points. The indicator has now improved over four consecutive months, pointing to stronger confidence among investors and analysts. The improvement in confidence is linked to the stronger eurozone economy, as key numbers such as PMI reports continue to point to expansion in the manufacturing and expansion sectors.

There were no surprises in the French presidential election, as Emmanuel Macron cruised to victory. Macron won 64% of the popular vote, with Marie Le Pen taking 36%. Macron’s margin of victory was larger than the polls predicted, and the DAX showed some gains immediately after the vote, but was unable to consolidate these gains. The markets had priced in a decisive Macron victory, so it’s not surprising that the Sunday rally did not last. Although Macron certainly “won big”, it should be noted that fully one third of French voters either abstained or voted a blank ballot as a protest vote. This means that Macron was viewed by many voters as a default choice, given that his opponent was the leader of the far-right and has been accused of being racist and xenophobic. The French elections now enter a new phase, with parliamentary elections slated for mid-June. Macron’s En Marche! party is barely a year old and is unlikely to win a majority, which would mean a power-sharing setup in parliament, likely between Macron’s party and the center-right. Similar to the presidential election, the parliamentary election promises to be full of uncertainty, and opinion polls during the election campaign will be important as fundamental releases and should be treated as market-movers.

French Election Timeline

May 7 – Emmanuel Macron wins French presidential election

May 11 – Official proclamation of President Emmanuel Macron

May 14 – [from midnight] End of Francois Hollande’s mandate

June 11 – First round of legislative elections

June 18 – Second round of legislative elections

Economic Calendar

Sunday ( May 7)

• French Presidential Election

Monday (May 8)

• 6:00 German Factory Orders. Estimate 0.7%. Actual 1.0%
• 8:30 Eurozone Sentix Investor Confidence. Estimate 25.3. Actual 27.4

*All release times are EDT

*Key events are in bold

DAX, Monday, May 8 at 8:05 EDT

Open: 12,769.25 High: 12,769.25 Low: 12,658.00 Close: 12,684.25

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