Euro jumps, Shares firm on French election 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.

E-mini Futures for the S&P 500 climbed 0.8% in early trade, while yields on 10 year US Treasury Notes rose almost 8 basis points to 2.31%.

Japan’s Nikkei  jumped 1.3% as the Yen retreated, while MSCI’s broadest index of Asia-Pacific Shares outside Japan edged up 0.2%.

Shanghai Shares, however, fell 1.5% after state media signaled Beijing would tolerate more market volatility as regulators clamp down on riskier financing.

Meanwhile yesterday 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 Macron widely tipped to win the final vote and keep France in the union.

Opinion polls put Macron ahead by over 20 points, a lead so large that a repeat of the Brexit surprise seemed highly unlikely. Investors had feared for the single currency’s future if one of the far-left candidates had gotten through to fight Le Pen. The Euro jumped in relief, and was last up 1.1%, 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% to 119.32 Yen while the US Dollar gained 0.9% to 109.99 Yen. Likewise, Gold fell 0.7% to $1,274.70 an ounce.