Considering how much European indices had run up over the last two weeks, capped off by new highs for the CAC and Dax Friday on anticipation Macron would win the second round of the French Presidential election, it's not a surprise to see traders taking profits against his even bigger than expected win. The CAC is down 0.8% so far with the Dax down 0.2%.
What is interesting though, is the inability for EUR/USD to crack $1.1000 today. After all, his win was such a big victory for stability and for the EU one would think EUR would be going up, not down. For that matter, defensive havens gold and JPY which were hammered by outflows of capital over the last two weeks, are on the rebound.
It looks like with this election done and dusted, traders are quickly moving on to the next set of uncertainties. Coming up next are the UK election in June (where PM May's Conservatives just won big in local elections and the German election in September (where Chancellor Merkel's party won a regional election on the weekend), both of which seem set to return their incumbents.
The next set of major uncertainties then are the start of Brexit negotiations and the US budget showdown this fall, followed by Italian elections and the end of the current Greek bailout program by the summer of 2018. Markets usually look 6-9 months out so all of these issues are coming within forecast horizons now that the most immediate risk has passed.
In other developments, crude oil is consolidating Friday's big bullish reversal, suggesting that recent selling pressure has been washed out. Saudi Arabia indicates that OPEC and Non-OPEC producers like Russia are supportive of keeping production cuts going for another six months and (most importantly) possibly beyond.
US index futures have big technical tests underway today with Dow futures at 21,000 and SPX futures at 2,400. We're now past the peak of earnings season for market moving big caps although a few retailers like Macy's (NYSE:M) report later in the week. It's also a light day for economic and political news in North America as everyone continues to digest last week's news.