ASIA MARKETS: Nikkei, Other Asian Markets Surge After Macron's Victory

By Ese ErherieneFeaturesDow Jones Newswires

Japan stocks hit 5-month high, Kospi reaches new record

Stock markets in Asia broadly rose as trading kicked off for the week 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 early 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 0.5%, hitting an all-time high, while the S&P/ASX 200 in Australia gained 0.7%, and the NZ 50 index in New Zealand rose 0.6%.

Investors had largely factored in the decisive victory by the market -friendly Macron against his far-right rival Marine Le Pen, said Hideyuki Ishiguro, senior strategist at Daiwa Securities. Macron took 64.6% of votes versus Le Pen's 35.4%.

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

In currencies, the euro slipped 0.1% in Asian trade, having earlier notched around 0.3% gains against the dollar. The euro got as high as Yen124.83 yen and $1.1040 after the election result but was last around Yen123.85 and $1.0985, respectively. One factor for the caution is the relative inexperience of Macron, which is widely considered his Achilles' heel, and investors have taken note.

Because 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.

Still, looking ahead, economic data could take the baton from politics as a driver of the common currency. The Commonwealth Bank of Australia said it anticipates further gains in the euro-dollar and will approach the coming week with a strategy of buying on declines in the currency pair. The eurozone's improving economic data, as well as low funding costs in Europe, are a strong incentive for equity investment there.

In commodities, oil prices rebounded following sharp losses sustained on Friday, which bolstered energy shares across the region. Australia's Oil Search (OSH.AU) rose 2.7%, while Japan Petroleum Exploration (1662.TO) jumped 3.4%. The global Brent benchmark was last up 1.6%.

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%.

(END) Dow Jones Newswires

May 07, 2017 22:45 ET (02:45 GMT)