Francois Fillon attends a meeting at the Trocadero square. Photo: Reuters, Philippe Wojazer
Francois Fillon attends a meeting at the Trocadero square. Photo: Reuters, Philippe Wojazer

European markets and the euro are weak after Alain Juppe withdrew from the presidential race as a substitute for the flailing Francois Fillon. Fillon called Emmanual Macron as “immature” concluding: “Never since the Fifth Republic has there been an election under such confused conditions. As for us — what a mess.” This doesn’t square with the conventional wisdom that Right and Center will combine to block Marine Le Pen. The French-German 10 year spread is wider by 4 bps, Italy-Germany wider by 4.6 bps. US debt markets marginally higher.

Europe IG is wider by 1.3 bps, Subfin unchanged, along with the equity prices of major Italian banks. French banks are mixed with Credit Agricole up 0.41% and BNP and SocGen both down by 0.66%.

CAC is down 0.43%. Dax is down 0.39% led by a 6% decline for Deutsche Bank after CEO John Cryan offered a “back to the future” business strategy concentrating on debt trading.

Asian markets are mixed after North Korea fired four missiles into Japan’s territorial waters but reaction is muted given that Japan is on its highest military alert. NKY is down 0.46%. ASX is up 0.30% and KOSPI is up 0.13%. Philippines is the top performer at +0.92% followed by India at +0.75%. AUD is unchanged. JPY is marginally lower at 113.83.

In other emerging markets, TRY is down marginally but Turkish stocks are up by a wider margin in local currency terms, despite the aggravated diplomatic confrontation between Turkey and Germany. Turkish industrials lead.

US news is dominated by Trump’s allegation of wire-tapping by the Obama Adminstration. This is murky; Andrew McCarthy (the US prosecutor in the first World Trade Center bombing) explains that the Obama administration in October obtained a Foreign Intelligence Surveillance Act court order involving some former Trump associates including dismissed campaign manager Paul Manafort. Even paranoids have enemies. US futures are down marginally.