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The potential disruption is done away with – Marine Le Pen has not emerged victorious in the French elections and Emmanuel Macron will move to the Élysée Palace as France's twenty-fifth president.
Remember, equity markets in Europe had started pricing in Macron's victory since the first round victory on 23 April, and Le Pen's loss ensures that the market's move doesn't stop abruptly.
In short term, traders with a bullish stance should cheer that.
What the Macron victory does is take away uncertainty, as a Le Pen win would have called into question the European Union and the monetary union. Equity markets would not have liked that scenario. Macron has sounded pro-business, consistently talking about labour and tax reforms as well as infrastructure spending. The equity markets love these terms. All French and EU focussed businesses are likely to benefit, and there may well be a bit of an up-move in European equities in the first half of the week.
Investors in emerging markets like India would be happy that the EU markets are now unlikely to see some vicious sell-off. This puts the focus back on domestic factors and the local triggers.
(The article was originally published on BloombergQuint)
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