French presidential election candidate for the En Marche ! movement Emmanuel Macron and his wife Brigitte Trogneux arrive on stage at the Parc des Expositions in Paris, on April 23, 2017, after the first round of the Presidential election. / AFP PHOTO / Eric FEFERBERG
The euro and most stock markets surged Monday after moderate candidate Emmanuel Macron won the first round of France’s presidential election and looked set to triumph in the run-off against far-right candidate Marine Le Pen next month.
Investors globally had been fearful that a wave of populism, which swept Donald Trump to the White House and saw Britain leave the EU, could lead to a win for the anti-European Le Pen and put the future of the bloc in doubt.
However, Macron is widely expected to gallop to victory over the divisive Front National leader and traders gave a huge thumbs-up, sending the euro flying above $1.09 at one point before paring the gains to $1.0850 from $1.0726 in New York on Friday.
The single currency also jumped to 119.46 yen from 117.07 yen.
In early European trade Paris surged 4.1 percent, London jumped 1.4 percent and Frankfurt gained 0.2 percent.
“Markets are happy to buy what they see as the fact — that 39-year-old Emmanuel Macron will be confirmed as the next president of the French republic in two weeks’ time,” Ray Attrill, head of FX strategy at National Australia Bank, said in a commentary.
The surge in optimism drove down the yen — considered a safe bet in times of uncertainty — which in turn lifted Japanese exporters.
Tokyo’s Nikkei ended up 1.3 percent, Sydney added 0.3 percent, Seoul gained 0.4 percent and Wellington put on 0.4 percent.
– Shanghai dives –
Hong Kong closed 0.4 percent higher but Shanghai sank 1.4 percent, extending a recent sell-off fuelled by profit-taking, liquidity concerns and regulatory plans.
“Market sentiment has been damped by recent tightening supervision on all fronts such as the banking commission, insurance commission, securities regulator,” Ben Kwong, executive director of KGI Asia in Hong Kong, told Bloomberg News.
“They expressed concern about bubbles and credit defaults. The deleveraging process is still in progress.”
Greg McKenna, chief market strategist at AxiTrader, said in a note that markets generally are “celebrating as though Macron is already the president of the republic”.
The gains in Asia extended Friday’s rally that was built on comments from US Treasury Secretary Steven Mnuchin, who promised that a tax reform plan would be unveiled soon.
That was followed by Trump saying Friday that there would be “a big announcement on Wednesday having to do with tax reform”.
Eyes are now on Washington, where lawmakers have just four days to agree a funding bill to avoid a painful government shutdown that would cost the economy billions of dollars.
There are fears Trump will refuse to sign anything that does not contain spending for his controversial Mexican border wall, with Democrats saying they will not back anything that does include such provisions.
– Key figures at 0810 GMT –
Tokyo – Nikkei 225: UP 1.4 percent at 18,875.88 (close)
Hong Kong – Hang Seng: UP 0.4 percent at 24,139.48 (close)
Shanghai – Composite: DOWN 1.4 percent at 3,129.53 (close)
Paris – CAC 40: UP 4.1 percent at 5,268.44
London – FTSE 100: UP 1.4 percent at 7,212.37
Euro/dollar: UP at $1.0850 from $1.0726 at 2100 GMT Friday
Euro/yen: UP at 119.46 yen from 117.07 yen
Pound/dollar: DOWN at $1.2788 from $1.2810
Dollar/yen: UP at 110.15 yen from 109.15 yen
Oil – West Texas Intermediate: UP 28 cents at $49.90 per barrel
Oil – Brent North Sea: UP 30 cents at $52.26
New York – Dow: DOWN 0.2 percent at 20,547.76 (close)