The Macron win was widely expected so market impact is likely to be modest. It does however set in place the dynamics for continued strength at the margin for European stocks and the euro which had been rallying since his win in the first round.
With global equities rising 7% in 1Q2017, valuations appear somewhat high on a historical basis. However, the bulk of this overvaluation is due to elevated multiples in the US, where at 22x trailing earnings, valuations have only been at such a level during the tech bubble of 2000-01.
The resilience in market earnings forecasts is in sharp contrast to the pattern seen in recent years. In each of the past five years (2012–2016) consensus estimates have declined materially in the first quarter. In each case, estimates continued to be reduced through the rest of the year.
The first round of the French presidential elections delivered an outcome close to both pre-election polls and market expectations, reversing the trends seen during the BREXIT referendum and the US presidential election in 2016.