Euro surges as France's Macron looks set for presidential win

European Union markets rally as centrist well-placed to beat Marine Le Pen in May 7 run-off

HONG KONG, China — The euro surged Monday after moderate Emmanuel Macron won the first round in France’s presidential election and looked set to triumph in the run-off against far-right candidate Marine Le Pen next month.

Investors globally had been watching the vote fearing that a wave of populism, which swept Donald Trump to the White House and saw Britain leave the EU, could lead to a win for the anti-European Le Pen and put the future of the bloc in doubt.

However, Macron is widely expected to gallop to victory over the Front National leader and traders gave a huge thumbs-up, sending the euro flying above $1.09 at one point before paring the gains to $1.0846 from $1.0726 in New York on Friday. It also jumped to 119.40 yen from 117.07 yen.

“Markets are happy to buy what they see as the fact — that 39-year-old Emmanuel Macron will be confirmed as the next president of the French republic in two weeks’ time,” Ray Attrill, head of FX strategy at National Australia Bank, said in a commentary.

French presidential election candidate for the En Marche ! movement Emmanuel Macron raises the arms at the Parc des Expositions in Paris, on April 23, 2017, after the first round of the Presidential election. (Eric FEFERBERG / AFP)

The boost in optimism also hit the yen — considered a safe bet in times of uncertainty — which in turn lifted Japanese exporters.

US tax reform

Tokyo’s Nikkei rose 1.3 percent, Sydney and Seoul each added 0.2 percent, and Wellington put on 0.4 percent.

However, Hong Kong gave up early gains and ended the morning session 0.1 percent down, while Shanghai sank almost 1.6 percent, extending a recent sell-off fueled by profit-taking, liquidity and regulatory plans.

“Given that pre-vote polling shows that Macron should trounce Le Pen on May 7, markets are already celebrating as though Macron is already the president of The Republic,” said Greg McKenna, chief market strategist at AxiTrader, in a note.

French presidential election candidate for the far-right Front National (FN) party Marine Le Pen delivers a speech in Henin-Beaumont, on April 23, 2017, after the first round of the Presidential election. (AFP PHOTO / ALAIN JOCARD)

The gains in Asia extended Friday’s rally that was built on comments from US Treasury Secretary Steven Mnuchin, who promised a tax reform plan would be unveiled soon.

That was followed by Trump saying Friday that there would be “a big announcement on Wednesday having to do with tax reform.”

Eyes are now on Washington where lawmakers have just four days to agree a funding bill to avoid a painful government shutdown that would cost the economy billions of dollars.

There are fears Trump will refuse to sign anything that does not contain spending for his controversial Mexican border wall, with Democrats saying they will not back anything that includes provisions for the plan.