Global financial markets have staged a relief rally after centrist French presidential candidate Emmanuel Macron won the first round of voting there and solidified his prospects of becoming France's next leader.
The euro rallied sharply, though gains have moderated some, while havens such as gold, the yen and U.S. Treasurys sold off.
Continue Reading Below
Mr. Macron won the first round with 23.9% of the vote, according an official tally of 96% of votes, with far-right candidate Marine Le Pen next at 21.4% and two other challengers several percentage points behind.
The results assuaged market fears of a victory for the nationalist Ms. Le Pen, who has been considered a wild card for markets.
"We didn't think she would win, but we saw two big surprise endings last year," said Yusuke Sakai, senior trader at T&D Asset Management, referring to Donald Trump's election and the U.K.'s Brexit vote.
Amid near-1% declines for the yen, Japan's Nikkei Stock Average jumped 1.3% in early trading. But gains elsewhere were more modest, with Australia's S&P/ ASX 200 and Korea's Kospi each rising 0.4% just after markets there opened. S&P 500 futures, meanwhile, climbed 0.9%.
While the yen sold off, the euro was widely up 1% or more versus major currencies. But observers put some of that down to a lack of liquidity as well as a rally in optimism.
Other safe-haven assets, which had been bid up slightly in the days before the election, pulled back. Gold futures declined some 1% toward $1,275 a troy ounce while 10-year Treasury yields climbed to 2.31% from late Friday's 2.23%.
With the final vote between the two candidates set for May 7, many in the market see a Trump-style surprise result as unlikely in France.
"With Macron heavily favoured in head-to-head polling against Le Pen, it seems most likely that the negative market scenarios--priced in over recent weeks--will recede between now and the runoff," said Timothy Graf, head of macro strategy for Europe, the Middle East and Africa at State Street Global Markets.
Still, with earnings season in full swing, traders' attention is likely to be diverted some.
"A blockbuster week for U.S., and to a lesser extent European, corporate earnings will likely prove to be the ultimate arbiter of direction," said Marc Ostwald, a strategist at ADM Investor Services International.
Kosaku Narioka contributed to this article.
Write to Ese Erheriene at firstname.lastname@example.org
(END) Dow Jones Newswires
April 23, 2017 21:28 ET (01:28 GMT)