Stocks, euro surge as France's Macron favoured for presidential win

 

Europe's stock markets and the euro surged Monday, breathing a sigh of relief after moderate candidate Emmanuel Macron won the first round of France's presidential election and looked set to triumph in next month's run-off against far-right candidate Marine Le Pen (Other OTC: PENC - news) .

Germany's blue-chip share index, the DAX, hit an all-time peak as stock markets across Europe pushed sharply higher and most of the world's other equity markets were also firmly in the black.

The Frankfurt index of 30 leading stocks briefly touched 12,456.18points, compared with the previous record of 12,391 reached in April 2015.

- 'Relief' -

Wall Street also posted healthy gains approaching midday in New York.

"Relief. That is the word that basically describes the sharp moves in the markets today," said Fawad Razaqzada, a market analyst at Forex.com.

The euro shot higher to trade above $1.09 at one point, compared with $1.0726 on Friday.

"European markets are in a buoyant mood," said Joshua Mahony, market analyst at IG (Frankfurt: A0EARV - news) trading group. "The move back into risk assets means the chief losers have been the likes of gold and the Japanese yen, with stock markets moving sharply higher."

The price of gold fell by more than one percent on the day.

- 'Ecstasy' -

"Emmanuel Macron winning the first round of the French Presidential election sent markets into ecstasy," said Jasper Lawler, Senior Market Analyst at LCG.

Banking stocks, in particular, took off, with some financials, like Societe Generale (Swiss: 519928.SW - news) and Credit Agricole (Swiss: ACA.SW - news) in Paris, posting double-digit intraday gains, he said.

"Bankers look after their own so former Rothschild investment banker Macron is a win for the banks," Lawler said.

Investors globally had been fearful that a wave of populism, which swept Donald Trump to the White House and saw Britain vote to 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.

- But will it last? -

Some cautioned that the party mood may fizzle out by the time of the second election round in two weeks' time and a parliamentary vote in June.

"Our optimism is a bit muted," said Stefan Kreuzkamp at CIO Deutsche Asset Management. "A lot depends on the outcome of the parliamentary election and how this outcome supports Macron's mandate."

But in the meantime enthusiasm was rampant.

"Bullishness has returned to equities," said Mike van Dulken, Head of Research at Accendo Markets.

Monday's gains in Asia extended a 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".

Oil had another volatile day as investors mulled the chances of OPEC extending an output cut agreement beyond June. After a firmer start, the oil price fell back into negative territory on selling by traders doubting that any extension, if agreed, would actually soak up the current glut on oil markets.

- Key figures at 1535 GMT -

New York - Dow: UP 0.9 percent at 20,736.18 points

London - FTSE 100: UP 2.1 percent at 7,264.68 (close)

Frankfurt - DAX 30: UP 3.4 percent at 12,454.98 (close)

Paris - CAC 40: UP 4.1 percent at 5,268.85 (close)

EURO STOXX 50: UP 3.7 percent at 3,577.38 (close)

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)

Euro/dollar: UP at $1.0858 from $1.0726 at 2100 GMT Friday

Pound/dollar: DOWN at $1.2784 from $1.2810

Dollar/yen: UP at 109.81 yen from 109.15 yen

Oil - Brent North Sea: DOWN 42 cents at $51.54 per barrel

Oil - West Texas Intermediate: DOWN 22 cents at $49.40

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