Getty Images file photo
Tokyo, Japan (BBN) – Equities in Asia turned mixed on Monday following the widely-expected results of the first round of presidential elections in France, with Emmanuel Macron and Marine Le Pen headed for a run-off on May 7, reports cnbc.com.
Centrist candidate Macron won 23.7 percent of the votes in the first round of the election on Sunday while National Front leader Le Pen secured 21.7 percent, according to estimates.
“While the increased popularity of the centrist candidate (Macron) is not a strong market driver, a collective sense of relief that the global economy is over another hurdle should see a risk on rally in Asia Pacific trading today,” CMC Markets’ Chief Market Strategist Michael McCarthy noted.
The euro bounced against the dollar to trade at $1.0844 at 11:45 am HK/SIN. The euro had earlier traded at a five-month high of close to $1.0935 against the dollar, compared to Friday’s close around the $1.072 handle.
The euro also made gains against the yen, trading higher at 119.28 yen.
“Euro/dollar has gapped much higher because we do not have the worst case scenario for the market. We may knock the level of $1.10 or possibly even $1.11 but this trade may fade as Le Pen is still there. This is going to keep traders on the sidelines,” ThinkMarkets’ Chief Market Analyst Naeem Aslam said in a note.
Mizuho Senior Economic Vishnu Varathan agreed that it might be too soon to look past political risks in France.
“(I)t may be premature to be seduced by the ‘ooh la la’ headlines of the French polls … (as) the final outcome of the French elections remains fairly wide open,” Varathan said in a note, adding that Macron’s substantial lead could be overstated. Varathan also highlighted how the surge in the euro above the $1.09 handle has since faded.
Markets in Asia traded mostly higher on Monday. Japan’s benchmark Nikkei 225 index surged 1.2 percent on the back of the French polls while the Kospi gained 0.22 percent. The ASX 200 was higher by 0.26 percent, driven by the strong performance in its financials sub-index.
In greater China, the Hang Seng Index reversed gains of more than 0.63 percent to fall 0.27 percent. Equities in mainland China also bucked the trend, with the Shanghai Composite down by 1.56 percent and the Shenzhen Composite off by almost 2 percent.
The losses in stock indexes on the mainland come after Chinese media stated that the government would endure greater volatility as regulators tackled corporate debt in the system, Reuters reported.
Geopolitical tensions in the Korean peninsula took a backseat even though tension continued to ramp up at the weekend. North Korea reportedly arrested an American citizen in Pyongyang. The hermit state also indicated that it was prepared to sink a U.S. aircraft carrier to showcase its military prowess.
Japanese Prime Minister Shinzo Abe also spoke with U.S. President Donald Trump about North Korea over the phone earlier today, with a separate call between Trump and Chinese President Xi Jinping also held.
In other currency news, the dollar index traded at 99.167, creeping up from the 98 handle seen earlier in the session. The greenback, however, was stronger against the safe-haven yen and off the 108 handle seen in the last two weeks. Dollar/yen last traded at 110. The risk-sensitive Aussie dollar traded around the $0.7555 mark.
On the energy front, oil prices crept up slightly after falling at least 2 percent on Friday although U.S. crude remained just below the $50 a barrel mark. U.S. West Texas Intermediate (WTI) crude was 0.48 percent higher at $49.86 while Brent crude traded up by 0.58 percent at $52.26.
In corporate news, Hong Kong jeweler Chow Tai Fook’s acquisition of Australian utilities company Alinta Energy was approved by Foreign Investment Review Board in Australia. Investors had been watching if regulators would clear the deal after Chinese investment in Australian electricity grid Ausgrid was blocked last August. Chow Tai Fook shares were lower by 1.9 percent.
Stateside, U.S. stock futures opened sharply higher on the back of the French election polls, with Dow futures soaring nearly 200 points earlier in the session. S&P and Nasdaq futures were both higher by around 1 percent. Wall Street had closed lower across the board last Friday.
BBN/SS/ANS
