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Consequences

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The first round of the French National Assembly election saw President Macron's supporters gain 32% of the vote (on a somewhat reduced turnout). Support for the Front National dropped. Projections suggest that Macron will have a majority in the assembly after next weekend's second round voting.
  • Italian elections in several cities (covering 20% of the electorate) did not give any victories to the anti-establishment Five Star movement. This may reassure investors, as Italy faces a general election in the next twelve months. UK PM May faces Conservative Party MPs with rampant media speculation about a change in leadership. 
  • French business sentiment is due – another opinion poll, with the same problems any survey has. However, this could be viewed as a test of business attitudes in the wake of Macron's elevation to the Élysée Palace – in particular around the issue of labor reforms.
  • UK consumer spending fell in May. Consumer spending has been dependent on reducing savings rates, which is never a sustainable method of spending growth. Political uncertainty is not likely to have that much of an impact, however. Japanese producer price inflation (a better signal of corporate pricing power than consumer prices) rose 2.1% yoy.