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Europe open: Stocks start week on strong note after French elections

Mon 19 June 2017 09:08 | A A A

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(ShareCast News) -

European stocks have started the session on the front-foot amid investor optimism after France's new centrist party En Marche! and its centre-right allies garnered a comfortable majority in the country's parliamentary elections at the weekend.

As of 0832 BST the benchmark Stoxx 600 was ahead by 0.76% or 2.96 points at 391.56, alongside a gain of 1.02% for Pari's cac-40 to 5,316.32 and an advance of 0.79% or 102.95 points to 12,855.53 in Germany's Dax.

"A positive opening call comes as traders welcome another Macron victory in France, this time in Parliamentary elections, which give hope to him passing reforms that can help both the French economy and thus Europe. There is also optimism about a positive start to UK-EU Brexit negotiations which kick off today in Brussels. The GBP may be off its lows, but not proving a FTSE hindrance yet," said Mike van Dulken and Henry Croft at Accendo Markets.

French president Emmanuele Macron's upstart centrist party and its ally Modem won roughly 360 of 577 seats in the parliament in Paris, giving it a comfortable majority with which to push ahead with their programme of economic reforms.

However, a record low rate of voter participation of 43.5%, which was 10 percentage points less than the previous record low was not lost on market observers.

"Small risks remain. A high abstention rate suggests Macron is likely to face public protests, potentially stifling the reform process," said Marion Amiot at Oxford Economics.

Nevertheless, Amiot raised her forecasts for French GDP growth in in 2018 by 0.2 percentage points to 1.7% and by one tenth of a percentage point for 2019 to 1.6%. Macron's reforms should make the jobs market more flexible, with lower corporate taxes and an envisaged €50.0bn of investment stimulating hiring and spending.

Acting as a backdrop, also over the weekend the British Chancellor cautioned that leaving the European Union with no deal in place would be a "very, very bad outcome for the UK."

On the other hand, the worst scenario might be a pact that was deliberately structured to punish the UK. Brexit negotiations were set to begin at 1000 BST, in Brussels.

In parallel, front month Brent crude futures were lower by 0.40% to $47.18 a barrel on the ICE, while euro-dollar was drifting lower by 0.09% to 1.1188.

Still on the economic calendar for Monday, Eurostat was set to publish construction output data for the month of April at 1000 BST.

Later in the session, US New York Fed president William Dudley was scheduled to deliver a speech at 1300 BST, followed by his opposite number at the Chicago Fed, Charles Evans, after midnight.

Jet-maker Airbus showcased an upgraded version of its superjumbo A380 which included a new wingtip assembly which reduces fuel consumption by as much as 4%.

Germany's Rocket Internet set a price range of between €22.0 to €25.50 per share for the stockmarket listing of Delivery Hero.

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