‘Political intrigue’ buoys European stock markets

London / AFP

European stock markets and the euro climbed on Monday after a fast-moving weekend of “political intrigue” in France and Germany, dealers said.
German Chancellor Angela Merkel declared Sunday that she would seek a fourth term in elections next year in the face of looming threats at home and abroad, ending months of feverish speculation.
And the shock winner of the first round of France’s right-wing presidential primary was conservative ex-premier Francois Fillon, who is tipped to face far-right leader Marine Le Pen in the presidential run-off next May. Former president Nicolas Sarkozy crashed out.
“An empty economic calendar allowed some eurozone political intrigue to grip the markets this Monday, the region finally (if briefly) taking its turn in the spotlight following the more attention-grabbing moves made in the UK and US,” noted Spreadex analyst Connor Campbell.
“The confirmation that Angela Merkel is set to run for a fourth term as German chancellor in next year’s election, combined with a Marine Le Pen-damaging victory for Francois Fillon in the first round of France’s right-wing primaries, has given life to the euro. “The fact that this political news suggests stability in a region standing on the precipice of potential chaos has also helped out the eurozone indices,” Campbell added.

‘Knock for establishment’
“Former French President Sarkozy was knocked out of the first round primary to find the next presidential candidate, which can be viewed as another knock for the establishment,” added Simon Smith, chief economist at trading firm FX Pro.
“Politics will not slip far down the agenda, with the Italian constitutional referendum approaching next week, which the prime minister has stacked his political career on.” Frankfurt stocks won 0.3 percent as the Bundesbank said the German economy will pick up speed again in the final months of the year following a summer slowdown, and Paris gained 0.5 percent in value on Monday.
London meanwhile drifted 0.05 percent as investors eyed the British government’s budget update due this Wednesday. Milan however bucked the trend, sliding 0.07 percent as investors fretted over Italian premier Matteo Renzi’s referendum due on December 4.
In Asia, Tokyo stocks rose further as the dollar consolidated gains against the yen, but other markets struggled on uncertainty over a Trump presidency. The greenback has soared to near six-month highs against the yen since Trump’s election win on a platform of huge infrastructure spending and tax cuts.