French Presidential Election In Focus

France has concluded its first round of voting in its presidential election, and independent centrist Emmanuel Macron will now be pitted against right-wing National Front leader Marine Le Pen to decide who will lead Europe’s third-biggest economy (behind Germany and the United Kingdom [UK]) going forward. Left behind in Sunday’s vote were conservative Francois Fillon and far-left candidate Jean-Luc Melenchon.

Analysts are looking at a clear path for a Macron victory, which has led to a near-term French market rally Monday. Yet there are plenty of reasons for centrists in the country — not to mention people around the world hoping to keep a secure European Union (EU) in place — to reject complacency: Le Pen has very strong support in her nationalist, anti-immigration base. Her stance against the EU in a general sense echoes last summer’s Brexit vote in the UK, and her unapologetic populism is reminiscent of the successful Donald Trump campaign in the U.S. last fall.

Macron, at 39 years of age, lacks extensive experience in governing, and is saddled with the task of working within the French system which currently has about 10% unemployment and a stagnant economy. Le Pen’s suggestion to radically overhaul the system may score key political points as the French citizenry grows increasingly frustrated with economic difficulties, acts of terrorism in Paris, and the like. And Trump’s election is proof populist rhetoric can work.

What Macron does have relates not to Trump’s election but his subsequent governance over the first 100 days, which has so far failed to pass key initiatives or gain traction on immigration bans, healthcare and tax reform, new jobs growth, etc. And Macron being viewed as market-friendly — as opposed to Melenchon’s socialist/communist leanings — should provide a blanket of security to those looking for a less-radical option than Le Pen. This is perhaps the biggest reason the French stock market is gaining, and in fact has posted its biggest rally in nearly 5 years.

This has prodded our domestic markets up big in Monday’s pre-market. The S&P 500 looks to open +27 points, the Dow +215 and the Nasdaq is poised to break through an all-time high as of today’s opening bell, up 64 points at this hour. However, should Le Pen begin to pull ahead in election polls prior to the vote on May 7th, we expect a correction would be in order.

Q1 Earnings Tally

Earnings season continues to surge this week, and ahead of today’s open we hear from 4 prominent Zacks Rank #3 (Hold) stocks with varying Zacks Style Scores (Value, Growth, Momentum:

Toy-maker Hasbro (NASDAQ:HAS) beat estimates for both Q1 earnings and sales, beating on the bottom line by 6 cents to 43 cents per share on $849.7 million in revenues, well ahead of the $833.3 million expected. This is at least the fifth straight quarter of an earnings beat for the company, whose trailing 4-quarter positive surprise average has been an impressive 27%. Hasbro’s Zacks Style Score is A. Read more here.

Consumer Staples major Kimberly-Clark (NYSE:KMB) posted mixed results for its Q1, beating earnings estimates by 3 cents to $1.57 per share. Revenues, however, were a bit shy of the Zacks consensus to $4.48 billion in the quarter. It’s the 4th quarter in the past 5 where Kimberly-Clark has beaten estimates on the bottom line. The company’s Zacks Style Score is B.

Illinois Tool Works (NYSE:ITW) impressed analysts ahead of the opening bell, topping estimates on both top and bottom lines: $1.54 per share beat by 9 cents while $3.47 billion in sales by roughly $70 million. This represents the biggest beat for ITW in the past 5 quarters, in which positive surprises have been consistent, if mild. ITW has a Zacks Style Score of C. Read more here.

Finally, oilfield and defense giant Halliburton (NYSE:HAL) has beat earnings estimates by a penny to 4 cents per share (still down more than 50% from its year-ago earnings per share) on exactly in-line revenues of $4.28 billion in the quarter. Halliburton is also used to beating earnings estimates, and usually does by by a much wider margin than its current Q1 results. The firm’s Zacks Style Score prior to the earnings release is F.