EUROPE MARKETS: French Stocks End At 2-year High After Vote Eases 'Frexit' Fears
24 Abril 2017 - 01:21PM
Dow Jones News
By Sara Sjolin and Victor Reklaitis, MarketWatch
CAC 40 scores biggest percentage gain in 5 years
French stocks finished sharply higher on Monday after centrist
Emmanuel Macron's strong showing in the first round of voting in
the France's presidential election, neutralizing fears that two
anti-European Union candidates would make the final runoff.
The CAC 40 index climbed 4.1% to end at 5,268.85, nabbing its
biggest one-day percentage gain since August 2012.
The French benchmark also achieved its highest close since April
2015, according to FactSet data. It had been en route to finish at
a nine-year high, but then gave up a little ground.
See:France ETF has biggest one-day pop since 2012 on election
relief
(http://www.marketwatch.com/story/france-etf-has-biggest-one-day-pop-since-2012-on-election-relief-2017-04-24)
European markets overall welcomed the French election result,
with the Stoxx Europe 600 jumping 2.1% to end at 386.09.
Germany's DAX 30 index climbed 3.4% to finish at 12,454.98,
scoring a fresh record closing high. Gains for the German benchmark
accelerated after the Ifo business climate index for April
unexpectedly rose to its highest level since July 2011
(http://www.marketwatch.com/story/german-business-sentiment-rises-unexpectedly-ifo-2017-04-24).
The U.K.'s FTSE 100 index climbed 2.1% to close at 7,264.68
(http://www.marketwatch.com/story/ftse-100-leaps-as-markets-take-heart-from-french-election-result-2017-04-24).
"Political uncertainty has been a headwind to global investors
reallocating to Europe--we see significant potential for European
fund flows to recover further," analysts at Bank of America Merrill
Lynch said in a note on Monday.
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.
Check out:4 things investors need to know about France's
presidential runoff
(http://www.marketwatch.com/story/4-things-investors-need-to-know-about-frances-presidential-runoff-2017-04-23)
Investors had feared two euroskeptics--Le Pen and far-left
politician Jean Luc Melenchon--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.
Read:5 things to know about Emmanuel Macro, the man poised to be
France's president
(http://www.marketwatch.com/story/emmanuel-macron-5-things-to-know-about-the-man-poised-to-be-frances-president-2017-04-24)
On Monday, the yield on the 10-year French government bond
dropped 11 basis points to 0.722%.
That helped the closely watched yield premium that investors
demand to hold French bonds over benchmark German government paper
to narrow to 42.40 basis points
(http://www.marketwatch.com/story/french-bond-spread-narrows-to-4-month-low-as-frexit-fears-abate-2017-04-24),
or 0.42 percentage points, the lowest since December. The spread
had widened to around 75 basis ahead of Sunday's ballot.
"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.
See:The market is going bonkers over France's election--here's
how in 5 wild charts
(http://www.marketwatch.com/story/the-market-is-going-bonkers-over-frances-election-result-heres-how-in-5-wild-charts-2017-04-24)
The Stoxx Europe 600 banks index rallied 4.8%, with French
lenders among biggest gainers. Shares of Credit Agricole SA
(ACA.FR) soared 11%, BNP Paribas SA (BNP.FR) jumped 7.5%, and
Société Générale SA (GLE.FR) rallied 9.9%.
Check out:Bank stocks ride high after Macron wins first round
(http://www.marketwatch.com/story/european-bank-shares-light-up-in-relief-rally-as-euro-break-up-worries-subside-2017-04-24)
In other countries, shares of UniCredit SpA (UCG.MI) rose 13% in
Milan, while Commerzbank AG (CBK.XE) added 9.4% in Frankfurt.
The euro also jumped on the French election result, buying
$1.0851, up from $1.0727 late Friday in New York. That was around
the highest trading level for the shared currency
(http://www.marketwatch.com/story/euro-jumps-to-5-month-high-in-french-election-relief-rally-2017-04-24)
since November.
(END) Dow Jones Newswires
April 24, 2017 12:06 ET (16:06 GMT)
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