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Fundamental Analysis

DAX Gains Ground as Macron Sweeps to Majority

Typography

The DAX index has started the week with gains, as the index is up 0.86 percent. The index is currently at 12,856.28 points. There are no economic indicators out of the eurozone or Germany. The sole event is a speech from Jens Weidmann, head of the German central bank. On Tuesday, Germany releases PPI and the eurozone publishes Current Account.

The political landscape has finally settled in France, after two months of elections. On Sunday, President Emmanuel Macron easily won a majority in presidential elections. Macron's En March party won about 61% of the vote, somewhat lower than recent polls, which had predicted that Macron would win as much as 80% of the seats in the National Assembly. Still, it's an impressive victory for the young and charismatic Macron, whose party is barely a year old. Macron ran on a pro-business agenda, promising to relax regulations and reform labor laws in order to make the French economy more competitive, but France's powerful trade unions are sure to push back against any legislation that will take away rights or benefits from workers. The unions have not shied away from going on strike or organizing mass protests in past conflicts with the government, so Macron will be hard-pressed to implement reforms while keeping peace on the labor front.

A full year after the Brexit referendum, which stunned Britain and the continent, British negotiators meet with their European counterparts on Monday. A month ago, Prime Minister Theresa May was confidently peddling a hard Brexit, putting Europe on notice that if she didn't like what the Europeans were offering, the UK would leave without a deal. However, May was humiliated in the UK election, and will be forced to govern with a minority government that is dependent on the support of a small Irish party. May's defiant tone has been replaced by a more conciliatory Philip Hammond, the British finance minister. Hammond has said that he wants a business-friendly and pragmatic Brexit and that no deal would be bad for the UK, although he won't accept an agreement that is aimed at punishing Britain. As for the Europeans, they have insisted that there will be no negotiations about a new trade deal, prior to progress being made on three key issues: (1) the legal status of EU citizens in the UK; (2) the status of the border between Ireland and Northern Ireland; and (3) the financial obligations of the UK to the EU. On the weekend, the EU's Economic and Financial Affairs Commissioner Pierre Moscovici, said that the European position was not 'hard ' or 'soft'. but rather 'amicable and firm'. There is little doubt that the EU will be firm, but given the bad blood between the two sides, it will be a pleasant surprise if the negotiations are indeed 'amicable'.

Author: MarketPulseWebsite: http://www.marketpulse.com/
MarketPulse
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