Check out our recap of last week's top market news, as well as a glimpse of the week ahead.
This week’s episode - week of April 24, 2017
In this week’s video, we cover the French election results, including an update on how markets are reacting to the developments. We also consider what’s ahead for the top two candidates. Elsewhere, Trump’s tax plan and the European Central Bank meets.
Added: 04-24-2017Length: 3:05
Weekly Market Review
Macron and Le Pen through in French election
The first round of the French presidential election concluded with pro-European centrist Emmanuel Macron earning 23.9% of the votes, followed by far-right wing Marine Le Pen’s 21.4%.
The top two candidates will now campaign for the presidency in the runoff election on May 7th. Macron is strongly favoured in the second round polls, currently holding a 20+ point lead over Le Pen.
The result was broadly in-line with expectations, providing a positive boost for markets. The euro opened the week stronger and European equity markets rallied, particularly French banks.
Canadian inflation Disappoints
Canadian inflation rose only 0.2% in March, missing expectations and below seasonal norms. On an annualized basis, headline CPI fell to 1.6%, a sizable 0.4% lower than the prior month.
Most categories reported lower prices during the month, with energy decelerating the most. Specifically, gas prices unexpectedly fell 1.1% in March. Food prices also declined for the sixth consecutive month.
The Bank of Canada’s core inflation measures softened as well, with ‘CPI common’ now 1.3% year over year, underscoring the Bank’s dovish position and providing further room to hold rates steady.
U.S. housing reports mixed
U.S. housing starts disappointed, falling 6.8% in March to a four-month low. However, 6- and 12-month averages continue to advance higher.
Positively, existing home sales reached decade-highs, rising 4.4%, as both single-family and condos reported strong results.
Building permits grew 3.6% in March. Though not enough to offset the prior month’s significant decline, permits are now above the level of starts, which adds some upside potential for the months ahead.
Other Economic News
The eurozone continues to lead global manufacturing activity with the composite PMI reaching six-year highs of 56.7 in March. Surprisingly, Germany did not account for the gain, as the country’s composite PMI fell to 56.3, from 57.1. France strengthened further, with a composite PMI of 57.4, as the private sector grew for the 10th consecutive month. Meanwhile, the U.S. composite PMI fell to a seven-month low in March of 52.7 and Japan reported manufacturing PMI of 52.8 in April, a two-month high.
Eurozone inflation retreated in March after reaching a four-year high in the prior month. The annualized CPI measure fell to 1.5%, largely due to energy prices, which are up only 7.4% from a year ago, as well as prices for heating oil and food. Core CPI was unchanged at 0.7% year over year, well below the European Central Bank’s 2% target rate.
What’s to come
GDP updates in canada and the U.S.
Canadian GDP data for February will be reported on Friday, as well as retail sales on Wednesday. The U.S. will also report economic growth, with Q1 GDP on Friday. New home and pending home sales will also be reported. Overseas, the European Central Bank will decide on monetary policy this week and update inflation numbers. The Bank of Japan also meets, with several Japanese economic reports due throughout the week as well.