Why Markets Do Indeed Love France's Macron Presidency

Potential investors interested in gaining exposure to the European markets have a number of options available. For instance, the iShares MSCI EMU ETF (NYSEArca: EZU) and SPDR EURO STOXX 50 (NYSEArca: FEZ) provide access to Eurozone markets. However, the two do not hedge their currency exposure, so they may be negatively affected by a weakening euro currency.

The Eurozone macroeconomic environment has steadily improved, with a significant uptick in manufacturing and services PMIs over the end of 2016. Eurozone growth may continue to pick up speed ahead after the European Central Bank revealed increased loan demand and easing of terms and conditions on new loans to help stimulate the economy.

“An early test of the new administration’s ability to deliver will be its labour market reforms. Proposed measures include allowing negotiations to be conducted in-house and directly with employers rather than negotiations with unions at national or branch level, capping severance packages in cases of unfair dismissal, reducing employee and employer contributions, and cutting labour costs through incentives for permanent contract hiring. We think these would contribute to a reduction of France’s 9.6% unemployment rate (versus a ratings peer median of around 4%),” notes Fitch.

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