Shares firm on French poll relief
The euro briefly vaulted to five-month peaks on Monday after the market’s favored candidate won through the first round of the French election, reducing the risk of a Brexit-like shock and sparking a mass unwinding of safe-haven trades. Spreadbetters pointed to opening gains across European bourses with the French market alone seen up around two percent.
SYDNEY — The euro briefly vaulted to five-month peaks on Monday after the market’s favored candidate won through the first round of the French election, reducing the risk of a Brexit-like shock and sparking a mass unwinding of safe haven trades.
Spreadbetters pointed to opening gains across European bourses with the French market alone seen up around 2%.
E- mini futures for the S& P 500 climbed 0.90% in early trade, while yields on 10-year US Treasury notes rose almost eight basis points to 2.31%.
Japan’s Nikkei jumped 1.50% as the yen retreated, while MSCI’s broadest index of Asia- Pacific shares outside Japan edged up 0.30%.
Shanghai shares, however, fell 1.70% after state media signaled Beijing would tolerate more market volatility as regulators clamp down on riskier financing.
In France, centrist Emmanuel Macron took a big step toward the presidency on Sunday by winning the first round of voting and qualifying for the May 7 runoff alongside far-right leader Marine Le Pen.
The outcome lessens the risk of an anti- establishment shock on the scale of Britain’s vote to quit the European Union with Mr. Macron widely tipped to win the final vote and keep France in the union.
Opinion polls put Mr. Macron ahead by over 20 points, a lead so large that a repeat of the Brexit surprise that spread turmoil in financial markets seemed highly unlikely.
Investors had feared for the single currency’s future if one of the far-left candidates had gotten through to fight Ms. Le Pen. The euro jumped in relief, and was last up 1.30% at $1.0866, having been as far as $1.0940, the highest since early November.
The safe haven yen slipped across the board with the euro surging 2.40% to ¥ 119.77 while the US dollar gained 1% to ¥110.20. Likewise, gold fell 0.80% to $1,273.40 an ounce.
“The rise of the euro and risk appetite rebounding is understandable and this should also see yields in Europe fall, spreads to Bunds tighten and stocks rally,” said Tim Riddell, an analyst at Westpac.
“However, such gains are likely to be contained when markets reflect upon the marked shift away from the “establishment” and just how effective the new president may be.”
Wall Street on Friday had only a modest lift from news President Donald J. Trump would announce the broad outline of his proposed tax package on Wednesday.
“Markets are skeptical that the real details will be forthcoming,” said analysts at ANZ in a note.
“There is also plenty of conjecture about whether any tax cuts will be able to be revenue neutral, and that could affect their ease of passage through Congress.”
The Dow ended Friday down a minor 0.15%, while the S& P 500 lost 0.30% and the Nasdaq fell 0.11%. —