EUROPEAN SHARES
European stocks rallied at the start of the new week, with investors ruling risk out of the markets following the results of the first round of legislative elections in France. The CAC-40 and STOXX-50 indexes jumped on Monday, with strong performances registered across almost all sectors after investors were given more visibility regarding France's political outlook.
Even if the far-right movement came out on top of this first round of votes, traders were pleased to see Marine Le Pen failed to secure the absolute majority needed to win the election. This situation eased fears of a "Frexit" scenario that could have been triggered if one of the political extremes had been put in power in the second-largest economy of Europe. A relief rally is now taking place on French shares, which is helping support a rise in the pan-European index, too.
However, the second round of the vote is looming next weekend, and investors will also have to face a busy week on the macro front with a batch of significant data, including EU PMIs and CPIs, alongside speeches from central banker Christine Lagarde. We expect market volatility to remain high on EU shares throughout the week.
Pierre Veyret – Technical analyst, ActivTrades
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