Markets Leap on French Election Results

By Riva Gold and Alexander Osipovich Features Dow Jones Newswires

Stocks surged Monday, reflecting investors' renewed appetite for risk after results from the first round of French presidential elections eased concerns about the future of the eurozone.

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The Dow Jones Industrial Average rose 198 points, or 1%, to 20746 in recent trading. The S&P 500 jumped 0.9%, while the Nasdaq Composite climbed 1%, putting the index on track for a record.

Financials were the biggest gainers in the S&P 500, rising 2%. Morgan Stanley soared 3.7% and Bank of America Corp. gained 3.8%.

Gold -- which is sometimes held as a hedge in times of market stress -- fell 0.9% to $1,277.10 an ounce, according to FactSet.

Government bonds sold off, with the yield on the 10-year U.S. Treasury rising to 2.268%, according to Tradeweb, from 2.234% on Friday. Yields rise as bond prices fall.

The CBOE Volatility Index, or VIX, a measure of anticipated stock-market volatility sometimes called the "fear gauge," fell 23%.

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"Today the market is enjoying a risk-on trade," said Quincy Krosby, a market strategist for Prudential Financial.

European markets rallied after independent centrist Emmanuel Macron won the first round of Sunday's vote in France, knocking leftist Jean-Luc Mélenchon and conservative François Fillon out of the running.

Mr. Macron will compete against National Front leader Marine Le Pen, who campaigned to take France out of the euro, in the second round on May 7.

His first-round win should increase appetite for borrowing and investment in Europe at a time when economic growth and earnings are already picking up, said Christopher Dyer, director of global equity at Eaton Vance.

"It gives a lot of confidence to the market that we have a good feel for the outlook in France and to a large extent puts to bed the Frexit prospect," said Mr. Dyer, who holds an overweight position in European stocks.

"I don't think we're questioning the integrity of the European Union or the euro today," he said.

France's CAC 40 index surged 4.1% on Monday, on track for its highest close since 2015 and best day since 2012, while Germany's benchmark DAX index added 3.4%, on pace to notch a fresh record, according to FactSet.

The euro was last up 1.2% at $1.0853 after touching a five-month high on Sunday.

In the U.S., this week is expected to be dominated by earnings, with companies such as Microsoft, and Exxon Mobil set to report their results from the first three months of the year.

But risk sentiment is expected to be tempered somewhat by the prospect of a looming deadline to avoid a U.S. government shutdown and an uncertain policy mix, analysts said.

President Donald Trump said he would be making a "big announcement" about taxes this week, but his budget director said that it might be June before the White House releases its detailed plan.

Earlier, stocks in Asia mostly moved higher following the French election result despite a drop in Shanghai-listed stocks. Hong Kong's Hang Seng Index added 0.4% while Australia's S&P ASX 200 rose 0.3%, led by energy companies and banks.

Worries over potential government action to reduce market risk sent Chinese stocks lower, however. The Shanghai Composite Index fell 1.4% in its worst day this year.

Write to Riva Gold at and Alexander Osipovich at

(END) Dow Jones Newswires

April 24, 2017 12:31 ET (16:31 GMT)