Macron Victory Lifts Stocks

By Ese Erheriene Features Dow Jones Newswires

Stock markets started the trading week strong in Asia, after the pro-European Union candidate Emmanuel Macron won the race to be the next president of France.

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Markets also caught an updraft from a spate of robust corporate earnings and a slightly better-than-expected April jobs report in the U.S. on Friday, which lifted the S&P 500 and Nasdaq Composite to records.

Japan's Nikkei Stock Average rose 1.8% in morning trade to its highest level since mid-December. The index was also playing catch-up with other markets in the region, having been shut since Wednesday for public holidays. The Topix bank subindex rallied 2.4%.

Elsewhere, Korea's Kospi added 0.6%, hitting an all-time high, while the S&P/ASX 200 in Australia gained 0.5%, and the NZ 50 index in New Zealand rose 0.6%.

Investors had largely factored in the decisive victory by the market-friendly Mr. Macron against his far-right rival Marine Le Pen. Mr. Macron took 64.6% of votes versus Ms. Le Pen's 35.4%.

"The assumption leading up to the vote was that Emmanuel Macron would win, and so the result is not a big surprise," said Raman Srivastava, deputy global chief investment officer at Standish Mellon Asset Management.

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Still, markets let out a collective sigh of relief at the absence of a Brexit-style political upset.

Bucking the regional trend, however, stock markets in China were lower amid concerns that sustained regulatory tightening may force funds to exit.

Investors were jolted by rumors widely circulated on local social media Friday that regulators are scrutinizing brokerages' asset-management operations as part of efforts to cut leverage in the financial industry. The Shanghai Composite Index fell 0.5%, while Shenzhen's main board slid 0.4%.

Additionally, China's General Administration of Customs said April exports rose 14.3% on the year in yuan terms Monday, while imports were up 18.6% on the year. Both increases were lower than the March numbers. The country's trade surplus widened to 262.3 billion yuan ($38.0 billion) in April from 164.34 billion yuan in March. The Shanghai Composite Index and Shenzhen's main board slid 0.9% each.

Meanwhile, Chinese metals prices stabilized after the sharp declines at the end of last week. The most actively traded iron-ore futures contract was down 0.5%, while steel-rebar futures rebounded 1.6% and copper was off 0.2%.

In currencies, the euro slipped 0.2% in Asian trade, having earlier notched around 0.3% gains against the dollar. One factor for the caution is the relative inexperience of Mr. Macron, which is widely considered his Achilles' heel.

Because Mr. Macron doesn't have a traditional party backing him, political analysts will be eager to make sense of the makeup of his government once it is formed, said Chris Weston, chief market strategist at IG Group. He added that the possibility of a fragmented government could be holding down euro buying.

In Hong Kong, while stocks rose modestly at the open, upside will likely be limited amid cautiousness about China, analysts say. Stabilization has become more or less a consensus view ahead of China's leadership transition, Goldman Sachs said, and the implication of tightened regulation on liquidity, as well as the second-half growth outlook, remains a top-of-mind question. The Hang Seng Index was last up 0.5%.

Among big mover stocks, shares of Malaysia's Iskandar Waterfront City tumbled nearly 30% after a consortium involving its parent failed to seal the purchase of a Kuala Lumpur real-estate project formerly owned by state investment fund 1Malaysia Development Bhd. The declines contrast with a 0.1% gain in the benchmark FTSE Bursa Malaysia Index.

In commodities, oil prices rebounded from sharp losses sustained on Friday amid expectations of further cuts by the Organization of the Petroleum Exporting Countries. This bolstered energy shares across the region. Australia's Oil Search rose 2.7%, while Japan Petroleum Exploration jumped 2.1%. The global Brent benchmark was last up 1.5%.

In the U.S. on Friday, the S&P 500 rose 0.4%, the Nasdaq Composite gained 0.4%, to 6100.76, its third record close of the week. The Dow Jones Industrial Average added 0.3%.

John Wu, Yifan Xie, James Glynn and Yantoultra Ngui contributed to this article.

Write to Ese Erheriene at ese.erheriene@wsj.com

(END) Dow Jones Newswires

May 08, 2017 00:18 ET (04:18 GMT)