And then there were two. The first round of the French presidential election on Sunday failed to deliver an overall majority for any of the 11 candidates, meaning there will be a 7 May run-off between the top two nominees – Emmanuel Macron, of the centrist En Marche! Party and Marine Le Pen, of the far-right Front National.
European investors signalled their relief at Macron’s first-round victory, with the Euro Stoxx 50 index rallying. The euro strengthened on the news, as did most Eurozone bonds, as investors started to believe that the pro-European candidate would beat Le Pen in the second and decisive round of voting.
However, recent polls suggest that underdog Le Pen is gaining ground on Macron in the final leg of campaigning, amid accusations that the latter is “smug” and a puppet of oligarchs. Nevertheless, Macron will have gained comfort that former President Nicolas Sarkozy and all the other candidates bar Jean-Luc Mélenchon (who has consulted his supporters), have endorsed him.
Ministers lock horns on pensions
In the UK, economic battle lines have been drawn since Prime Minister Theresa May’s surprise announcement of a snap UK general election on 8 June. On Wednesday, pensions came into the limelight with the PM refusing to commit to the continuation of the “triple lock”, which guarantees that the basic state pension increases by the larger of inflation, average earnings or 2.5%. Given mounting inflationary pressures – largely caused by sterling weakness – some have speculated that the Government will enact a “double lock”, removing the 2.5% commitment, a policy endorsed by former pensions minister Baroness Altman.
Pensions were also a hot topic at the Organisation for Economic Co-operation and Development (OECD). The Paris-based think tank made a controversial suggestion to scrap the UK state pension for the wealthiest 5-10% of retirees in favour of boosting pensions for “those who really need it”. As justification for the redistributive policy, the report cited the pressures of an ageing society and the low level of UK state pension compared to the other 35 OECD countries. Currently, the state pension is not means tested, so anyone who has paid national insurance for 30 years is eligible to receive it, regardless of wealth.
Turbulent times for Airbus
European aerospace and defence group Airbus announced this week that its underlying earnings more than halved in the first quarter of 2017. The company has been buffeted by rising production costs for its new A350, problems with engine suppliers for its new A320 short-haul jet and difficulties relating to its 400M military aircraft programme.
There was better news for Samsung, which delighted investors with its best quarterly profits for nearly four years, sending its share price to a record high. Six months after the Galaxy Note 7 fiasco, when 2.5 million handsets had to be withdrawn for overheating batteries, the South Korean tech giant has completed an impressive turnaround. The strong results have been driven by growth in demand for television and mobile phone flat screens and memory chips. Yet, it’s not all been good news. Lee-Jae Yong, the company’s de facto head, is currently on trial for bribery and embezzlement.
And finally…
“In order to be irreplaceable one must always be different.” Well, so said couturier extraordinaire, Coco Chanel. Some high-street fashion peddlers took her words to heart this week. In the US, upmarket department store Nordstrom unveiled a pair of jeans for those who are, like, totally over that unworn denim look. For a mere $425, you can pick up a pair of “distressed” Barracuda Straight Leg Jeans that are covered in fake mud. Meanwhile, customers of UK retailer Top Shop will have no problems with mud if they plump for its newest offering. Its “out of the ordinary” clear plastic jeans, on sale for just £55, are wipe-clean. But will the transparent vinyl trousers catch on with the fashionistas? Or will they see them as just, er, pants?
