The results of the first round of voting in the French presidential election have pushed the value of the euro to its highest in five months.
Euro Jumps To Five-Month High In First Round Of French Presidential Election
On Sunday, early results of the French election showed that centrist Emmanuel Macron and Marine Le Pen of the far right succeeded for the final round of election.
Investors were concerned for a while that Mr. Macron was trailing behind far left candidate, Jean-Luc Mélenchon, requiring voters to choose between two Eurosceptic candidates.
In Asian stock markets, the euro climbed 2 percentage points to its highest since mid-November last year.
On Monday, Asian markets were trading higher with the Nikkei 225 rising 1.5% at one point before gradually retreating.
In South Korea, the Kospi and the ASX 200 in Australia demonstrated slightly lower gains in the 0.4%- 0.5% range in early trade.
According to UBS Wealth Management economist, Dean Turner, “If these projections are accurate, investors will be relieved that a mainstream candidate succeeded for the second round.”
He added, “As things stand, Macron could be the next French president so there is likelihood that there will be a recovery in risk appetite toward France and other markets in Europe.”
At the start of Asian markets, the euro climbed 2% against the dollar to settle at $1.09395, its highest level since last November, a day after the results of the US presidential elections were announced.
The euro rose 3% against the yen, which is a favourite among investors when the levels of risks are perceived as being high, to trade at its highest in five weeks at 120.905 yen.
The yen however tumbled more than 1% against the dollar while the euro climbed 1.4% to 85.005 pence against the sterling.
Yuji Saito, forex director of the Credit Agricole in Tokyo said, “The market’s initial reaction was stronger than anticipated meaning many people were quite guarded ahead of the vote.”
Solidifying the future
Mr. Macron is a former investment banker and he also served as economy minister under President Francois Holland. Although he is relatively inexperienced, the polls indicate that he may defeat Ms. Le Pen in the second round.
According to Octavio Marenzi, CEO of financial research consultancy Opimas, “Macron will reassure the markets given his promise to bring down the corporate taxes and to ease the administrative load for companies.”
Kathleen Brook of City Index echoed the same views saying the results were positive because Macron is a political stable and centrist candidate and is therefore considered a ‘safe pair of hands.’
Ms. Brook added Macron would be able to solidify the future of the euro and the EU.
There is also the expectation that the main share markets in France and Germany will rise with a fall on French bond yields expected once the results are confirmed Monday.