Stocks surge as key uncertainty removed following French vote
US, European markets rally as investors cheered results of first round in presidential polls
Both the US and European markets rallied yesterday as investors cheered the results of the first round in the French presidential election, which has been seen as a lingering risks for many global investors. Asian markets were mixed.
Emmanuel Macron, a centrist, is favoured to win the French elections next month over nationalist Marine Le Pen in a runoff election. This has triggered a relief rally in risk-seeking, global stock market traders.
“Most of the euphoria that we are seeing in Europe and US is being driven by French elections results. A Le Pen win would have been catastrophic not just for Europe but globally,” Nadi Bargouti, head of asset management with Emirates Investment Bank, told Gulf News.
The French CAC 40 index jumped more than 4 per cent higher at 5,264.96. The Dow Jones Industrial Average jumped 200 points after opening, or 0.93 per cent to 20,740.09, while the S&P 500 index jumped nearly 1 per cent to 2,371.66.
“With this market-friendly outcome reducing the risk of a Trump-style shocker, investors have rediscovered their appetite for riskier assets,” said Hussain Sayed, chief market strategist, FXTM.
Bucking the trend, the Dubai Financial Market General Index closed 1.12 per cent lower at 3,430.88.
Not main driver
Analysts feel fundamentals are not the main driver in markets nowadays.
“Markets are up as if all the structural issues have been resolved in the Eurozone. Investors are continuing to focus on headlines, and ignoring fundamentals,” said Bargouti, who has a neutral view on global equity markets generally.
The euro jumped to its highest level since November.
“While the current risk-on rally may support the euro in the short-term, gains could still be limited as anxiety mounts ahead of the second round of the elections,” Sayed said. The final round of French elections is scheduled on May 7.
The euro jumped 1.31 per cent against the dollar to be at $1.0869, after hitting a high of $1.0937.