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Is Frexit next? | Calamatta Cuschieri

The latest of the exit scenarios to spook financial markets is the risk of France leaving the Eurozone

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Calamatta Cuschieri
9 February 2017, 11:02am
Marine Le Pen is favoured in the first French election round set for 23 April and her presidential campaign was launched with speeches on immigration and globalisation
Marine Le Pen is favoured in the first French election round set for 23 April and her presidential campaign was launched with speeches on immigration and globalisation
The latest of the exit scenarios to spook financial markets is the risk of France leaving the Eurozone. Market are focusing on the possibility that populist Marine Le Pen could become France’s next president. The potential win is somewhat a concern for the markets, as her aim tends to follow the Brexit blueprints. Her presidential campaign was launched with speeches on immigration and globalisation. She is favoured in the first French election round set for 23 April. This news may lead markets to search for safe heavens, knowing similar situations happened with Donald Trump and Brexit.

Markets today

Wednesday was a mixed picture in European equity markets put managed to pull out a win at the close of the session, ahead of the Brexit Bill note and a barrage of earnings reports. Post-earnings drop by Maersk, Tullow oil, Carlsberg and a decline in oil prices kept stronger gains in check. On the upside, Sanofi, with its income topping forecasts and Vestas Wind systems with a jump in full-year net profit helped the indexes close on a positive note.

Meanwhile, the corporate earnings season continued on Wall Street with markets digesting companies’ financial results and remarks made by the US President Donald Trump on his persistence to reinstate the travel ban and on his intention to go ahead with building the wall on the country’s border with Mexico. A “real wall” is needed to stop drugs pouring into the United States. He also added, “I wasn’t kidding, I don’t kid about things like that.” The proposed Mexican wall was a crucial part of his campaign last year.

Energy

Energy prices traded in the red at the beginning of the session after a private survey reported a much-bigger-than-expected rise in US oil supplies for last week. Continuous increase in US crude inventories became the primary factor offsetting the OPEC output cut deal and driving the oil prices into the negative territory. However, oil prices managed to shake off earlier declines at the end of the European session.

Meanwhile, Chinese demand for crude has also diminished, rising at a much slower rate than in the past two years. The slowdown in growth was with a much smaller consumption of gasoline and diesel.

Pharmaceuticals and technology

Meanwhile, the corporate earnings season continued on Wall Street, with Glaxo SmithKline reporting a jump in its operating profit of 52% on an annual basis. In the fourth quarter, the company brought in revenue of £7.59 billion, 21% higher than in the same period of 2015. The result translates to core operating profit of £2.06 billion.

Tech giant Apple’s share price has soared about 8% since the company reported better-than-expected earnings last week. Earnings per share reached a record at $3.36, up from $3.28 a year earlier. This was $0.15 ahead of analysts' estimates. This performance led numerous financial analysts to raise their target price for the Apple share. This has led to an all-time high share price.

This article was issued by Rodrick Duca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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Calamatta Cuschieri is one of Malta’s largest financial services firms. The company offe...
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