French stocks surge higher after Emmanuel Macron wins first-round vote

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The main indicator of the Australian Securities Exchange (bottom R) is seen in red shortly after the local market opened in Central Sydney October 4, 2011. Australian stocks eased 0.6 percent on Tuesday, pressured by falls in global equities markets in a
At no time in the history have we had a situation like we are currently facing in central bank policy making. Reuters/Daniel Munoz

European stocks reportedly rose on Tuesday, with French stocks closing at a nine-year high. The Stoxx Europe 600 SXXP, +0.47 percent surged 0.2 percent to 386.91, which had been its highest level since August 2015.

The surge takes place after the benchmark rose 2.1 percent on Monday as centrist Emmanuel Macron secured the first round of voting in the France’s presidential election. Based on polls, he is more favoured to win than far-right candidate Marine Le Pen, Market Watch notes.

Several investors reportedly expect the candidate seen as pro-business to win a runoff against the remaining anti-EU candidate, which is slated on May 7. On Monday, Le Pen announced her decision to step down as the leader of the National Front party temporarily, a move perceived as a way to broaden her support heading into the election. Le Pen campaigned against the European Union.

Barclays empahised its rating on European equities. Barclays strategist Dennis Jose said they are looking forward to fund flows being the leading driver of European stock.  “A reduction in political risk, coupled with an end to the seven-year stagnation in earnings, should lead to an acceleration in foreign investor buying of European equities,” he wrote in a research note.

Celebration comes early

CAC 40 index PX1, +0.19 percent was at 0.2 percent at 5,277.88 on Tuesday. It was its highest close since January 2008. The index went high at 4.1 percent earlier this week to end at 5,268.85, the largest one-day percentage gain since August 2012.

In Europe, sentiment obtained a boost from the United States, where stocks rallied on upbeat earnings. The Nasdaq Composite Index COMP, +0.00 percent, for the first time, traded above 6,000. UK’s FTSE 100 index UKX, +0.18 percent  gained 0.2 percent.

Luca Paolini, chief strategist at Pictet Asset Management, said investors now have a reason to keep their attention on the fundamentals in Europe. Pictet Asset Management is a firm based in the UK that handles billions in client assets. “Maybe it’s too early too early to celebrate, but that’s what the market is pricing in,” the Washington Post quoted Paolini.

Asian markets saw improvements too. Japan’s Nikkei 225 index rose 1.4 percent. South Korea’s Kospi and Hang Seng of Hong Kong indexes both added 0.4 percent. Strong earnings reports had also been beneficial for stocks as companies report better results than expected. Analysts predicted this to be the best quarter of earnings growth in years.

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