Stocks, euro surge as France's Macron favoured for presidential win

[LONDON] Europe's stock markets and the euro surged Monday after moderate candidate Emmanuel Macron won the first round of France's presidential election and looked set to triumph in the run-off against far-right candidate Marine Le Pen next month.

Germany's blue-chip share index, the DAX, hit an all-time high as stock markets across Europe and Asia breathed easier after pro-business French presidential candidate Emmanuel Macron's first-round success.

The Frankfurt index of 30 leading stocks briefly touched 12,428.62 points, compared with the previous record of 12,391 reached in April 2015.

The euro shot higher to trade above US$1.09 at one point, compared with US$1.0726 on Friday.

"European markets are in a buoyant mood... after the French pollsters got it near enough spot on," said Joshua Mahony, market analyst at IG 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 gold fell by nearly 1.5 per cent on the day.

Investors globally had been fearful that a wave of populism, which swept Donald Trump to 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, Mr Macron is widely expected to gallop to victory over the divisive Front National leader and traders gave a huge thumbs-up.

"Markets are happy to buy what they see as the fact - that 39-year-old Emmanuel Macron will be confirmed as the next president of the French republic in two weeks' time," Ray Attrill, head of FX strategy at National Australia Bank, said in a commentary.

Some cautioned that the party mood may fizzle out by the time of the second election round in two weeks' time, but in the meantime enthusiasm was rampant.

"Bullishness has returned to equities," said Mike van Dulken, Head of Research at Accendo Markets.

The surge in optimism drove down the yen - considered a safe bet in times of uncertainty - which in turn lifted Japanese exporters.

Tokyo's Nikkei ended up 1.3 per cent, Sydney added 0.3 per cent, Seoul gained 0.4 per cent and Wellington put on 0.4 per cent.

Hong Kong closed 0.4 per cent higher but Shanghai sank 1.4 per cent, extending a recent sell-off fuelled by profit-taking, liquidity concerns and regulatory plans.

The gains in Asia extended Friday's rally that was built on comments from US Treasury Secretary Steven Mnuchin, who promised that a tax reform plan would be unveiled soon.

That was followed by Trump saying Friday that there would be "a big announcement on Wednesday having to do with tax reform".

AFP