Global markets rallied Monday after moderate candidate Emmanuel Macron won the first round of France's presidential election, sending stocks to records on both sides of the Atlantic (Shanghai: 600558.SS - news) and boosting the euro.
Sunday's election result avoided the most feared outcome: a second-round contest May 7 between far right, anti-immigration candidate Marine Le Pen (Other OTC: PENC - news) and far left Jean-Luc Melenchon, both fierce critics of the European Union.
"Collectively, there has been a big sigh of relief in global markets this morning after the first round of balloting in the French presidential election avoided the worst-case scenario of a Le Pen-Melenchon run off," said Briefing.com analyst Patrick O'Hare.
Germany's blue-chip DAX index jumped 3.4 percent to end at a fresh record, while Paris climbed 4.1 percent and London 2.1 percent.
Major US indices gained more than one percent and the Nasdaq (Frankfurt: 813516 - news) finished at a new record on large gains for Google parent Alphabet (Xetra: ABEA.DE - news) , Facebook (NasdaqGS: FB - news) and other tech giants.
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 and US names like JPMorgan Chase (Swiss: JPM-USD.SW - news) and Bank of America (Swiss: BAC-USD.SW - news) winning more than three percent.
Investors globally had been fearful that a wave of populism, which swept US President Donald Trump into 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 National Front leader and traders gave a huge thumbs-up.
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 safe-haven gold fell by more than one percent on the day.
- But will it last? -
Some cautioned that the party mood may fizzle out by the time of the second round vote in two weeks, followed by 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."
Macron, a political neophyte despite serving as a government minister, has no established political organization behind him and no seats in parliament.
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 2100 GMT -
New York - Dow: UP 1.1 percent at 20,763.89 (close)
New York - S&P 500: UP 1.1 percent at 2,374.15 (close)
New York - Nasdaq: UP 1.2 percent at 5,983.82 (close)
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 $1.0867 from $1.0726 at 2100 GMT Friday
Pound/dollar: DOWN at $1.2793 from $1.2810
Dollar/yen: UP at 109.78 yen from 109.15 yen
Oil - Brent North Sea: DOWN 36 cents at $51.60 per barrel
Oil - West Texas Intermediate: DOWN 39 cents at $49.23 per barrel