MACRON WIN HELPS BUOY AUSTRALIAN INVESTORS
THE Australian share market has snapped a four-day losing streak, after encouraging US jobs data, the election of pro-European centrist Emmanuel Macron as French president, and other factors buoyed investors.
CMC Markets chief market analyst Ric Spooner said market sentiment was also boosted by a half-year result from Westpac that was broadly in line with expectations.
Away from the banks, takeover activity around publisher Fairfax and the easing of licence fees and restrictions on television broadcasters boosted media stocks, and Chinese trade data that was solid despite being weaker than anticipated also lifted enthusiasm.
“There’s a lot to be pleased about and not much to be worried about at the moment,” Mr Spooner said.
The Aussie dollar surrendered most of its early gains after the release of weak Australian building approval figures but subsequently made up that lost ground to be at 74.10 US cents, above its close on Friday at 73.86 US cents.
Mr Spooner said the Aussie had benefited from other data that was positive – the NAB business conditions survey and the Chinese trade figures for April – and stronger commodity prices overnight.
While Macron’s win had been widely anticipated, the election cast a long shadow over the continent as Le Pen, had wanted France to exit the 28-nation EU, with potentially catastrophic consequences for the region and its euro currency.
“Europe dodges a bullet here,” said Paul Christopher, head global market strategist for Wells Fargo Investment Institute.
The rise in the euro was not as strong as it was after Macron’s victory in the first round of the presidential vote. Investors seem to have largely expected the outcome and polls showed him consistently in the lead by a wide margin going into the second round.
But analysts say the result lifts a huge amount of uncertainty for the European economy, which is just picking up after years of financial crises and stagnation.
“This is certainly positive for the European economy,” said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics.
The possibility of a Le Pen presidency had unnerved some after polls had failed to accurately read the popular sentiment that led to Britain’s vote last year to leave the EU and the election of President Donald Trump.
Le Pen’s proposals included holding a referendum on EU and euro membership – and experts agree the euro wouldn’t have survived France’s departure.