Global shares mixed after 'Europe dodges a bullet'

Yuri Kageyama, The Associated Press</span>
Published Monday, May 8, 2017 1:03AM EDT
Last Updated Monday, May 8, 2017 7:03AM EDT

TOKYO -- Global shares were mixed Monday after Emmanuel Macron, a centrist would-be reformer and supporter of the European Union, triumphed over far-right leader Marine Le Pen in the French presidential election.

France's CAC 40 slipped 0.6 per cent to 5,399.44 in early trading, following the Sunday's balloting. It had risen last week to its highest level since early 2008 -- before the worst of the global financial crisis -- in anticipation of the result. Germany's DAX lost 0.2 per cent to 12,693.54. Britain's FTSE 100 added 0.1 per cent to 7,307.90.

U.S. shares also were also set to drift lower, erasing last week's gains, with Dow futures down 0.1 per cent at 20,929. S&P 500 futures fell 0.1 per cent to 2,395.20.

Japan's benchmark Nikkei 225 added 2.3 per cent to finish at 19,895.70, reflecting investor relief over the election's outcome.

South Korea's Kospi index hit a record high ahead of a presidential election Tuesday, gaining 2.3 per cent to 2,292.76. The vote caps a bout of turmoil triggered by an influence peddling scandal that brought about the impeachment of former President Park Geun-hye.

The euro, shared by France and 18 other countries, was trading at $1.0955. It had edged up 0.1 per cent to $1.1013 late Sunday in Europe. The dollar rose to 112.62 yen from 112.59 yen late Friday in Asia.

Other Asian stock markets were also higher, cheered by the results.

South Korea's Kospi added 2.3 per cent to 2,292.76. Australia's S&P/ASX 200 gained 0.6 per cent to 5,870.90 and Hong Kong's Hang Seng gained 0.3 per cent to 24,547.98.

The Shanghai Composite lost 0.8 per cent to 3,078.61, however, on weaker than expected trade data for April.

France's CAC 40 index rose last week to its highest since early 2008 -- before the worst of the global financial crisis -- in anticipation of the result.

Macron's win was anticipated but the race cast a long shadow over the continent given Le Pen's desire to leave the 28-nation EU, with potentially catastrophic consequences for the region and its euro currency.

"Europe dodges a bullet here," said Paul Christopher, head global market strategist for Wells Fargo Investment Institute.

Analysts said strong jobs data in the U.S., released late last week, added to the cheer in Asia. Attention was turning to other regional economic indicators, they said.

"A sense of normalcy has returned to the forex desks this morning as the final round of the French elections had the expected," said Stephen Innes, senior trader at OANDA.

The rise in the euro was not as strong as it was after Macron's victory in the first round of the presidential vote. Investors seem to have largely expected the outcome and polls showed him consistently in the lead by a wide margin going into the second round.

But analysts say the result lifts a huge amount of uncertainty for the European economy, which is just picking up some momentum after years of financial crises and stagnation.

"This is certainly positive for the European economy," said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics.

The possibility of a Le Pen presidency had unnerved some after polls had failed to accurately read the popular sentiment that led to Britain's vote last year to leave the EU and the election of President Donald Trump. Le Pen's proposals included holding a referendum on EU and euro membership -- and experts agree the euro wouldn't have survived the departure of its founding member and second-biggest economy.

"Macron's election offers stability to Europe's single market, and strengthens the EU's position in the upcoming Brexit negotiations," Margaret Yang of CMC Markets said in a commentary.

"With another area of political uncertainty clarified, investors will now focus on corporate earnings and the cyclical economic tail wind brought about by the broad recovery in global trading," she said.

Macron has vowed to strengthen the EU and euro and to reform France's economy, which hasn't grown quickly enough in recent years to bring unemployment decisively below 10 per cent. He will face a stern test in trying to do so as he will likely struggle to put together a majority in parliament for his year-old party in parliamentary elections next month.

In energy trading, U.S. crude oil gained 22 cents to $46.45 a barrel in electronic trading on the New York Mercantile Exchange. It had jumped 70 cents, or 1.5 per cent, to $46.22 a barrel in New York late Friday. Brent crude, the standard for international oil prices, added 4 cents to $49.14 barrel in London.

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