Presidential elections: French stocks head for two-year high as likely Macron win eases ‘Frexit’ fears

Macron highly tipped to win

— Investors had feared two eurosceptics - Le Pen and far-left Jean-Luc Mélenchon - would make it to the runoff but Macron is now highly tipped to win come May 7, after surprisingly making it to runoff.

French stocks rallied on Monday after centrist Emmanuel Macron won the first round of voting in the French presidential election, easing fears that two anti-European Union candidates would be in the final runoff, MarketWatch reports.

The CAC 40 index climbed 3.7% to 5,247.45, setting it on track for its biggest one-day percentage gain since August 2015. If the French benchmark ends Monday at that level, it’ll mark the strongest close since April 2015, according to FactSet data.

Other European markets also welcomed the French election result, with the Stoxx Europe 600 jumping 1.8% to 384.80. The UK’s FTSE 100 index climbed 1.4% to 7,214.04, while Germany’s DAX 30 index added 2.4% to 12,336.83.

The upbeat mood came after centrist Macron and far-right candidate Marine Le Pen came in first and second in France’s presidential election on Sunday, qualifying for the second round on May 7.
Investors had feared two eurosceptics — Le Pen and far-left politician Jean-Luc Mélenchon — would make it to the runoff vote, as opinion polls had been showing an extremely tight race. Both candidates had promised to put France’s EU membership up for a referendum, sparking fears of a so-called Frexit.

Macron is now leading the polls for the runoff vote, setting him on course to become France’s next president.

On Monday, the yield in 10-year French government bonds dropped 9 basis points to 0.792%.

“Investors who seek to benefit from today’s news in company-related markets need to focus on equities, where the performance potential over the coming days is clearly higher, as stock markets did not react much to recent robust macro data,” analysts at UniCredit said in a note.

“Investors were too reluctant to take corresponding risks ahead of the elections. French banks, alongside European banks in general, will likely be the biggest winners,” they added.

The Stoxx Europe 600 banks index rallied 3.6%, led by French lenders. Shares of Credit Agricole soared 10%, BNP Paribas jumped 8.1%, and Societe Generale rallied 9.2%.

In other countries, shares of UniCredit rose 9% in Milan, while Commerzbank added 8.1% in Frankfurt.

The euro also jumped on the French election result, buying $1.0834, up from $1.0727 late Friday in New York. That was the highest trading level for the shared currency since November.


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