UK: Main Parties Face Tough Local Election Test, But Little Short-Term Impact
Local elections take place in 24 local authorities and six regional mayoralties across England on 1 May. A parliamentary by-election will also take place in the seat of Runcorn and Helsby after sitting Labour MP Mike Amesbury was sentenced to ten weeks in prison for assault. The last time these areas held council elections was 2021, when the centre-right Conservatives, in gov't under then-PM Boris Johnson, performed strongly on the back of the COVID-19 vaccine rollout. This time around, the populist Reform UK is well-positioned to make gains at the expense of both the Conservatives and the governing centre-left Labour party.
- In the July 2024 election, Amesbury won the new Runcorn and Helsby seat with a majority of 14,696 on 52.9% of the vote. The Reform UK candidate came in second place with 18.1%. The (little) opinion polling carried out to date shows Reform UK with a narrow lead, while data from Smarkets shows bettors assigning a 75.8% implied probability that Reform UK wins the seat.
- The loss of Runcorn and Helsby would be a blow to PM Sir Keir Starmer, but not a significant one. Starmer's gov't retains a sizeable majority in parliament, and the likely poor performance of the Conservatives could dominate the news cycle after the vote, particularly given pressures on leader Kemi Badenoch.
- As such, while the results will be pored over in UK media, they are unlikely to impact gov't stability or lead to any major shifts in gov't policy in the short term.
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FRANCE: Le Pen Barred From Running In 2027 Election
After being found guilty of embezzlement, far-right Rassemblement National (National Rally, RN) figurehead Marine Le Pen has been declared immediately ineligible to run for public office. The ban is for five years, upending the 2027 presidential election in which she was the early frontrunner. Le Pen left the courtroom before her full sentence was read out (she was also fined EUR100k and sentenced to four years in prison (two suspended) that can be served with an ankle monitor). There will undoubtedly be an appeal, but following a constitutional court ruling earlier in the month, Le Pen will remain barred from running for office during the appeal. As such, unless her appeal is successful and swift, the RN will have to find another candidate to run in the 2027 presidential election.
- The verdict marks a major point in French politics. Le Pen has run for the presidency three times, reaching the run-off in 2017 and 2022 and increasing her vote share each time. Recent scenario opinion polling, putting her up against various leftist, centrist, and conservative figures showed Le Pen either winning the run off or level-pegging. Given Le Pen's high profile, it remains to be seen whether her ban results in the RN failing to capitalise on widespread public anger at the Macron administration, or if choosing a less divisive figure could in fact boost the RN's chances of winning the presidency.
- The initial favourite to take on the RN's presidential mantle would appear to be party leader Jordan Bardella. However, by 2027, he will be just 31 years of age, potentially raising concerns about his experience and suitability.
OUTLOOK: Price Signal Summary - Gold Bulls Remain In The Driver's Seat
- On the commodity front, the trend condition in Gold is unchanged, it remains bullish. Today’s strong gains highlight a bullish start to this week’s session and confirm a continuation of the primary uptrend. The rally also once again, highlights fresh all-time highs for the yellow metal. Sights are on the $3151.5, a 3.000 projection of the Nov 14 - Dec 12 - 19 price swing. Support to watch lies at $2992.4, the 20-day EMA. A pullback would be considered corrective.
- In the oil space, despite recent gains, a bearish trend condition in WTI futures remains intact, and gains this month are considered corrective. However, a key resistance at $69.17, the 50-day EMA, has been pierced. The breach strengthens a bullish theme and opens $70.98, the Feb 25 high. For bears, a reversal lower would expose the bear trigger at $64.85, the Mar 5 low. Clearance of this level would resume the downtrend and open $63.73, the Oct 10 ‘24 low.
EQUITIES: Stoxx 50 Futures Move Closer To Next Support
Euro Stoxx 50 futures see a more convincing break below 5,200.00 at the second time of asking.
- Nothing much in the way of a fresh headline catalyst to drive the latest leg of the sell off, with early NY reaction to overnight price swings perhaps factoring in.
- Oil has pulled back from session highs, another potential factor aiding the move.
- The break below 5,200.00 obviously deepens the bearish technical threat in Euro Stoxx 50 futures. Next support seen at the Feb 4 low (5,160.00).
