Financial markets in Asia will be the first to react to the results of Sunday’s first round of voting in the French Presidential poll. Because it was inconclusive, there will be a second run off in two weeks on Sunday May 7 between the two top finishers, Emmanuel Macron, an independent, and Marine Le Pen, the National Front.
He finished first, two points ahead of Ms Pen and is now favoured to win the run off on May 7.
That will make for two weeks of swirling trading on all financial markets – so watch bonds, currencies and gold in particular.
That’s why trading last week in the physical and futures market will have no bearing on the path of markets for today, let alone for the next two weeks.
The ASX share futures market produced no leads on Saturday morning at the close with a flat close on the day before.
That was after the 0.6% gain to 5854.1. That left the index off 0.6% for the week.
The broader All Ordinaries index shed 0.75 over the week to end Friday’s session on 5925.9.
The Aussie dollar ended around 75.40 US cents, down around 0.30 of a cent over the week. The Aussie 10 year bond closed at 2.53%, around 0.40 down in the past month, much of which came before and after Easter.
Wall Street fell Friday following President Donald Trump’s promise of a much-awaited tax-overhaul plan from Wednesday onwards and ahead of the first round of France’s closely watched presidential election overnight Sunday.
Trump told the Associated Press he would be releasing a “massive tax cut” package in the coming week. Investors though started focussing on the impending deadline Friday for the US government debt ceiling.
Trump wants all sorts of increases in spending, including money for his wall with Mexico, but the strongest opposition to his ideas is coming from the hard right section of the Republican Party around the so-called freedom caucus.
The S&P 500 index finished down 7.15 points, or 0.3%, at 2,348.69. The Dow lost 30.95 points, or 0.2%, at 20,547.76, trimming what had been a 73-point slump during trading.
And the Nasdaq Composite fell from the record close set Thursday, falling 6.26 points, or 0.1%, to close at 5,910.52, after having dipped under 5,900 earlier in the session.
For the week, the Dow rose 0.5%, the S&P 500 was up 0.9%, and the Nasdaq jumped 1.8%, following two weeks of declines. With the coming week seeing more than 190 S&P 500 companies reporting quarterly results, earnings will also play a major part in trading confidence.
With Amazon and Alphabet (Google), plus a string of industrial and consume products giants reporting (such as McDonald’s Boeing, Ford and 3M), it could be a week of rising volatility.
And investors should also watch oil prices where traders seen to have re-awoken to the dangers of rising US production.
