European stock markets and the euro ratcheted higher Monday, particularly in France, after the first round of the country’s presidential election saw centrist Emmanuel Macron emerge on top — stoking hopes that he will defeat far-right Marine Le Pen in the run-off in two weeks’ time.
KEEPING SCORE: France’s CAC 40 spiked 4.6 percent to nine-year highs of 5,290, while Germany’s DAX advanced 3.2 percent to 12,427. The FTSE 100 index of leading British shares was 1.9 percent higher at 7,247. U.S. stocks were poised for solid gains at the open, with Dow futures and the broader S&P 500 futures up 1.2 percent.
FRANCE FOCUS: Though Le Pen came second with 21.5 percent of the vote on Sunday and will contest the runoff on May 7, the favorite to be the country’s next president is Macron, who came top with around 24 percent. Following Britain’s vote to leave the European Union and Donald Trump’s surprise victory in the U.S. presidential election, the hope in the markets is that the rise of populism around the world — and the associated potential unpredictability in policymaking — may have peaked. That hope was also evident in the performance of the euro, which was up 1.1 percent at $1.0846, having struck five-month highs overnight above $1.09.
ANALYST TAKE: “In Macron, we see the strongest opponent pitted against Le Pen, in what is likely to be the final vote of confidence for the EU in what was always going to be a critical year for the future of Europe,” said Joshua Mahony, market analyst at IG.
TRUMP ON TAX: Though the second run of the French election will remain in the spotlight, there’s likely to be investor interest also in upcoming tax proposals from the Trump administration. However, investors aren’t expecting too much from Wednesday’s anticipated announcement following the recent reverse on repealing the Affordable Care Act. “Markets have received this news with a big pinch of salt,” said FXTM Research Analyst Lukman Otunuga.
CHINA BLUES: Benchmarks in Shanghai and Shenzhen fell by more than 1 percent in their worst losses in four months after regulators warned over the weekend of risks in the financial industry. The Chinese Insurance Regulatory Commission, in a notice carried by the state-run Xinhua News Agency, ordered insurers to improve risk controls amid a crackdown on misuse of capital.
ASIA’S DAY: Japan’s benchmark Nikkei 225 rose 1.4 percent to finish at 18,875.88. Australia’s S&P/ASX 200 gained 0.3 percent to 5,871.80. South Korea’s Kospi added 0.4 percent to 2,173.74. Hong Kong’s Hang Seng added 0.5 percent to 24,164.24.
ENERGY: Benchmark U.S. crude rose 27 cents to $49.89 a barrel in New York while Brent crude, used to price international oils, rose 32 cents to $52.28 a barrel in London.
CURRENCIES: The dollar recovered to 110.11 yen from 109.09 yen late last week in Asia. The euro rose to $1.0851 from $1.0701.