Podcast: UK & French Elections. US employment data & FOMC minutes

Created: 1st July 2024

An important week for UK and EU markets. The snap French election is a huge gamble by Macron which could back-fire with consequences for the direction of the EU and the Eurozone. The results gave RN 33.2% of the vote, the left wing alliance 28% and Macron’s Ensemble alliance 22.4%. Despite the support for RN, both the Euro and French equities and bonds have rallied as the result was not as bad as feared. The race is on for the Left alliance and Ensemble to ensure they don’t divide the anti-RN in the run-offs next weekend. In the UK, the result of the election is in no doubt, but the scale of the Labour victory could see the ruling conservative party wiped out in some areas with notable names losing their seats.

So, what do we know?

(A forex, index, and commodity market review)

Weekly change (amount change and percentage change on the week)

FTSE -55 -0.66%

DAX +71 +0.39%

DOW -14 -0.04%

S&P unchanged

NASDQ -19 -0.10%

NIKKEI +1,266 +3.28%

Hang Seng -313 -1.74%

Global equities were broadly unchanged ahead of key payroll data out in the US and impending elections in both France and the UK. The standout move was in Japan where the Nikkei surged 3.28% as the Japanese Yen remained under pressure whilst traders weigh up the risk of intervention by the Bank of Japan to halt the Yen’s fall. The next BoJ policy meeting is not until July 31st which is a long time without any action that could stall the Yen’s fall. Ueda, the Governor of the BoJ, says the bank could still raise rates but traders are testing that resolve.

UK markets remain in pre-election mode with little to shift the dial. Markets have fully discounted a Labour victory and the press is awash with rumours about possible tax rises and the consequences. Unless taxes are increased Labour can only tinker with Conservative policies. Further into their first term the markets will know to what extent taxes have increased and what impact the Labour party’s backers have on Labour policy.

French markets remain concerned about a possible RN outright majority in the 577 seat National Assembly. In the first round held on Sunday, RN has a commanding lead in the polls although due to the complications of the two-round voting system, its difficult to predict the winner. Many of the seats will go to the run-off vote on 7th July when the results of the election will be confirmed. The outcome is significant for France but also the wider European Union and single market. If RN achieve an outsight majority, then Le Pen and Bardella, her 28-year-old second in command, will implement some radical policies aimed at cutting immigration and prioritising services aimed at French citizens, referred to as national preference. RN is also critical of the Eurozone project and advocates a significant change to France’s relationship with the Eurozone and the wider European Union. This uncertainty will persist until the decisions taken by the next incoming government, which will almost certainly include RN, in what’s called a “cohabitation” or power sharing arrangement with Macron, and RN’s more extreme policies.

US equities ended the first half of 2024 with significant gains. The S&P500 rallied 14% into record highs, marking one of the best performances since the dot com era of the late 1990’s. However, the gains were down to a small group of star performers, referred to as the Magnificent seven, although it was five shares that were responsible for 60% of all those gains. So, we must thank Apple, Amazon, Meta, Microsoft and Nvidia for most of these gains which highlights the lack of breadth in the gains. In fact, NVIDIA alone was responsible for 31% of all equity gains by the S&P500 in the first half of this year. The risks are all too clear should the mega stock lose a proportion of these gains in H2. Stripping out these mega stocks, S&P500 was up just 4% in H1.

EURUSD +0.20 +0.18%

GBPUSD unchanged

USDJPY +1.03 +0.68%

The US dollar closed unchanged on the week with little news to push it in either direction although traders remain nervous about the outcome of the French snap election. The Fed’s minutes from the last FOMC meeting held on the 12th of June may provide markets with more insight into Fed thinking towards interest rates. Last week a more hawkish member of the FOMC said she remained willing to raise borrowing costs again” if inflation remains at its current level”.

Gold +4 +0.17%

UK OIL +0.52 +0.62%

US OIL +0.60 +0.75%

Little movement in crude oil last week as prices consolidated following significant gains since the first week in June.

Gold was unchanged, hemmed in by the uncertainty about the direction of both the euro and the US Dollar.


This week’s data and events to watch out for.

A busy week for markets this week with elections in France and the UK dominating markets there whilst we have US non-Farm employment data and Eurozone wide CPI data.


China Manufacturing and Service sector PMI data. Weaker service sector data which continues the trend of weakening data over the past three months.

US ISM Manufacturing PMI. An improvement to 49.2 expected but still below the 50 level which separates contraction from expansion. USD sensitive.

Eurozone Lagarde speaking at ECB Forum on Central Banking, taking place in Sintra which concludes on Wednesday.


Eurozone Core flash CPI Inflation. Expected 2.8% year on year. Euro and eurozone assets sensitive.

Eurozone More Central Banker interaction at the ECB Forum on Central Banking Forum in Portugal.


US Private payroll company, ADP release its own Non-Farm Employment change. Similar to last month at 156K new jobs.

US ISM Services PMI data. Expected to fall but remaining above 50 as it has done for all but two of the last 48 months. USD Sensitive.

US FOMC minutes from meeting held on 12th June. USD and US assets sensitive to this update.


UK General Election. The outcome is not in doubt but the scale of it is more uncertain. Many commentators expect labour to win with a landslide as almost all news and media back Labour. Little impact expected on the result.

UK Construction PMI. Having struggled for most of 2023 the construction sector is picking up, along with the UK economy generally. In the context of the election, this release will have no impact this time.


US Non-Farm Employment change. 189K new jobs. Unemployment rate expected to be unchanged with average hourly earnings lower at +0.3% month on month. USD, US and global assets sensitive to this release.