Europe close: German stocks at record high as volatility sinks after Macron win
A win for French presidential hopeful Emmanuel Macron at the weekend pushed stocks across the Continent sharply higher, with Germany's Dax notching up a fresh record high even as a gauge of investor caution dropped by the most on record.
France's Cac-40 jumped 4.14% to close at 5,268.86, followed by gains of 3.37% for the German Dax to 12,454.98. In parallel, the VStoxx index which tracks traders' expectations for volatility in the EuroStoxx 50 benchmark plummeted 35.24% to 16.25.
However, it was Italian shares that fared best, with Milan's FTSE Mibtel climbing 4.77% to 20,684.41.
credit agricoleAt the sector level, banks fared best, with the Stoxx 600's gauge of lenders' shares rising by almost 5%, with French banks the biggest gainers. Shares in Credit Agricole jumped 11%, Société Générale surged 9.86% and BNP Paribas was up 7.52%.
Italy’s UniCredit climbed 13.20% and Germany’s Commerzbank was 9.45% higher.
In parallel, euro/dollar ended the day up by 1.13% at 1.0848.
Meanwhile, oil prices slipped 0.6% to close at $51.65 per barrel on the ICE on concerns about rising US shale production despite the Opec-led pact to curb supply.
Macron's victory, as had been roughly predicted by the pre-election polls, led strategists at Bank of America-Merrill Lynch to sound a confident note on the likelihood that he would come out on top in the run-off on 7 May.
However, a minority of analysts stressed that it remained to be seen just how solid a mandate Macron would gain in the next parliamentary elections, in June, to push through his agenda of structural reforms.
In any case, the wekeend's events eased fears of a French exit from the euro and perhaps from the European Union too - at least for now.
Commenting on the day's price action, Chris Beauchamp, chief market analyst at IG said: "The reaction seems a bit strong for a result that chimed with what everyone was apparently expecting anyway. But we had seen markets suffer steady losses over the past month, usually April is a good month, with the S&P 500, FTSE 100 and DAX all historically strong.
"But the recent rally had begun to look jaded, with Donald Trump failing to deliver, and geopolitical concerns on the rise. Emmanuel Macron’s win doesn’t change anything outside France, and with a second round still to be run we are not out of the woods yet."
In his speech on Sunday, 39-year-old Macron, who has never held an elected office, said: "In one year we have changed the face of French politics".
Gemany’s DAX also benefitted from better-than-expected business confidence data.
The current assessment index edged up to 121.1 from 119.5, surpassing analysts' expectations of 119.5. However, the expectations index fell to 105.2 from 105.7, missing expectations for a reading of 106.0.