The French presidential election on Sunday was watched closely around the world as a choice between Marine Le Pen, a populist who wanted France to leave the European Union, and Emmanuel Macron, a political newcomer who pledged to fight against the wave of nationalism sweeping Europe.
Macron – a former investment banker – easily won the election with more than 66 percent of the vote.
But as important as this election seemed, when markets opened up for trading in Asia on Monday morning the action could be characterized as pretty dull. The euro rose about a fifth of the magnitude it did two weeks ago, after the first round of the election. Equities and bonds traded in tight ranges after the election as well.
The same lackluster response inside France characterized the election itself. Turnout was the lowest in 40 years and a large number of ballots were left blank as abstentions. While Macron was clearly tattooed with the “establishment candidate" label, the real establishment candidates got booted from this contest in the first round.
Another important note: Marine Le Pen's numbers in this election were low. But her National Front party doubled its vote from the previous election and announced that it will change its name as it positions itself for the next presidential election in 2022.
What's coming up next for Europe?
The Brexit negotiations between the UK and the EU will be significant – and the French election puts some pressure on British Prime Minister Theresa May. Macron's victory strengthens the EU's position in those negotiations, which means that May will need to answer in kind with a strong mandate next month when she faces voters.
My View: Europe and its financial markets avoided the “summoning of the apocalypse," which is how a Le Pen victory would have been portrayed. But the EU must address the underlying issues that brought discussions of nationalism into mainstream politics. Those concerns remain – and the clock is ticking for them to be addressed before we come to this juncture once again.
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