Favorable French Election Results Send Blue Chip Dow Up about 200 Points

U.S. stocks closed sharply higher on Monday as investors reacted to the results of the first round in the French presidential election. The price action strongly indicates that investors like the election outcome and the strong odds that centrist Emmanuel Macron will win in the second round. Currently, the polls show that Macron is an overwhelming favorite when he and the second runner-up, Marine Le Pen face-off again on May 7.

The blue chip Dow Jones Industrial Average closed more than 200 points higher with banks leading the charge. The benchmark S&P 500 Index settled about 1 percent better, also led by a surge in the financial stocks. The tech-based NASDAQ Composite finished the session up more than 1 percent after posting a new all-time high.

Traders also braced for the next round of earnings reports with about 200 S&P components set to report this week. According to The Earnings Scout, of the 95 S&P 500 companies that have reported as of Monday morning, 77 percent exceeded earnings expectations.

 Gold

June Comex Gold futures retreated more than 1 percent on Monday, posting its biggest one day break in over a month, after the market’s favored French presidential candidate won the first round of the country’s election, easing concerns about a political shock, or a Brexit-type reaction.

Helping to underpin the market and prevent a complete washout to the downside was a weaker U.S. Dollar and renewed concerns over North Korea. According to the Commodity Futures Trading Commission, speculators increased their net long positions to a five-month high in the week to April 18.

Forex

The EUR/USD surged and the USD/JPY plunged on Monday after the results of the French presidential election were released. The Euro rose nearly 2 percent after exit polls showed centrist frontrunner Emmanuel Macron won the first round of the election.

The global equity markets liked the results which prompted them to sell safe-haven assets like the Japanese Yen, gold and Treasury instruments. The USD/JPY weakened from the start of trading on Monday, settling at 109.757, or down about 0.67%.

Crude Oil

June West Texas Intermediate Crude Oil futures fell for a sixth straight day on Monday as investors continued to pressure the market due to concerns that the pledged output cuts by major producers is failing to accomplish what it set out to do.

Prices were also pressured by reports that investors are pricing in the strong possibility of floating storage. When this occurs, oil for immediate delivery becomes much cheaper than that for future delivery. This makes it more profitable for investors to charter tankers to store crude for sale at a later date.