Stocks rose strongly at the opening of trading on the Tel Aviv Stock Exchange (TASE) this morning on the back of the result of the first round of the French presidential election, in which centrist Emmanuel Macron, with 23.8% of the votes, and far-right leader Marine Le Pen, with 21.5%, took the top two places, and will face off in a second round of voting on May 7. Center-right candidate François Fillon and left leader Jean-Luc Mélenchon took just over 19% of the votes each. The Tel Aviv 35 Index is currently up 1.27%.
The French election is considered a crucial test for the future of the European Union. There were fears on the markets that the second round would be between Le Pen and Mélenchon. Former banker Macron, who is seen as the more likely candidate to win the second round, is in favor of greater European integration and is perceived as a moderate who will not cause upsets on financial markets. At the same time, investors are aware that Le Pen could yet win a surprise victory.
The rises on the TASE are being led by the big two banks, Hapoalim and Leumi, both up 1.62%. In third place is another bank, Mizrahi Tefahot, up 1.41%. Teva is up 0.61% and Bezeq is up 0.77%. Discount Bank is up 2.30%. European bourses have opened substantially higher. In France, the CAC 40 is up 3.48%, while the FTSE 100 is up 1.75% and the DAX is up 2.24%.
The euro is also stronger this morning, gaining over 1% against the US dollar. The shekel-euro rate is up 0.22% in comparison with Friday's representative rate, at NIS 3.9554/€. The shekel-dollar rate is down 0.99%, at 3.6446.
In an assessment of the financial markets following the first round of the French presidential election, Excellence Investment House chief economist Yaniv Hevron said today, "We are already seeing European markets function better, without obstructions. All the same, even though the trend in the next few days is likely to be positive, investors are recommended not to become dazzled by that. The risk on the stock markets will still be with us for at least a couple of weeks.
"The European market has been our preference since the end of last year, as it is much more attractive than the American market from the point of view of its upside, outlook for profits and pricing," says Hevron. "In the coming period it will behave much better, without political uncertainty and without the fear of the break-up of the European Union. A combination of factors will also support a strengthening of the euro."
Published by Globes [online], Israel business news - www.globes-online.com - on April 24, 2017
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