Global equity markets, euro rally after results of French election
NEW YORK (Reuters) – Global equity markets rallied on Monday, boosting a gauge of world stocks to a record high, while the euro briefly jumped to a five-month peak against the US dollar, as the first round of an election in France went to the market’s preferred candidate.
Centrist Emmanuel Macron took a big step toward the French presidency on Sunday by winning the first round of voting and qualifying for a May 7 runoff against far-right leader Marine Le Pen.
The victory for the pro-European Union centrist Macron sent MSCI’s gauge of stock indexes across the globe to a record high of 453.38.
The blue-chip euro-zone STOXX 50 index surged 4% and was headed for its best day in nearly two years, while France’s CAC40 climbed 4.2% and was on track for its biggest daily percentage gain in almost five years.
Investors were concerned a victory for Le Pen could eventually put France on the path taken by Britain to leave the European Union.
“The nice thing about putting a black swan, geopolitical disaster situation behind you is you can start focusing on fundamentals,” said Art Hogan, the chief market strategist at Wunderlich Securities in New York. “Coming into the weekend you had all that sort of risk off behavior that gets unwound pretty quickly when the disaster is avoided.”
In afternoon trading, the Dow Jones Industrial Average rose 207.41 points, or 1.01%, to 20,755.17, the S&P 500 gained 23.31 points, or 0.99%, to 2,372, and the Nasdaq Composite added 63.84 points, or 1.08%, to 5,974.37.
Investors were gearing up for the busiest week for corporate results in at least a decade on Wall Street, with more than 190 S&P 500 companies, including heavyweights Alphabet and Microsoft, due to report.
The pan-European FTSEurofirst 300 index rose 1.99%, and MSCI’s gauge of world stocks gained 1.43%.
Asia also saw a risk rally. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.61% higher, while Japan’s Nikkei rose 1.37%.
The euro pared earlier gains but was still up more than 1% against the dollar and more than 2% against the yen.
There was also an unwinding of safe-haven trades.
Shorter-term German bonds saw their biggest sell-off since the end of 2015, as investors piled back into French, Italian, Spanish, Portuguese and Greek debt.
Benchmark 10-year notes last fell 15/32 in price to yield 2.2874%, from 2.236% late on Friday.
The Japanese yen weakened 0.8% versus the greenback to 109.97 per dollar. Wall Street’s so-called fear gauge, the VIX volatility index, plunged the most since November.
Spot gold dropped 0.9% to $1,272.03 an ounce. US gold futures fell 1.21% to $1,273.50 an ounce.
Oil prices continued to decline after last week’s selloff, weighed down by signs US production and inventory growth were offsetting OPEC’s attempts to reduce a persisting global glut.
US crude fell 0.97% to $49.14 per barrel, and Brent was last at $51.54, down 0.81% on the day.