Macron Victory Drives Riskier Assets Higher

European stock markets rallied as investors priced out French exit risks and risk appetite surged. The French CAC 40 led the way with a more than 4.0% gain, but DAX and FTSE 250. The DAX is up 3% and above the 12400 mark, while Italian and Spanish markets outperformed with the CAC. Sentiment already improved in Asia, where most markets managed to close with gains, led by a 1.37% rise in the Nikkei, which was supported by a weaker Yen. The selloff in China meanwhile continues and the CSI 300 was down -1.02% at the close amid speculation that authorities will step up efforts to curb leveraged trading. U.S. stock futures are rallying in tandem with European markets and oil prices recovered from lows of USD 49.67 per barrel WTI currently at USD 50.05.

The UK’s FTSE 250 hit a new record high following a 1%-plus gain in early session, since settling off the highs but remaining well bid. The narrower FTSE 100 is up 1.8%, but has remained well off the record high it posted on March 20. On the day, the weakness in the pound versus the resurgent euro has accounted for the outperformance in the FTSE 100, which is comprised of foreign currency-earning multinational companies, while the FTSE 250 is made up of more UK-focused companies and is thereby less sensitive to fluctuations in the pound.

Macron Takes on Le Pen

Macron was declared the winner of the first round of the presidential election with 23.8% of the votes, he will now take on Le Pen, who is second with 21.5% of the votes, for second round of May 7. The conservative candidate Fillon is third with 19.9% and leftist Melenchon in fourth place with 19.6%.

WTI crude prices are up 1% at $50.05, recouping just over half of the losses seen on Friday. The post-French election risk-on vibe has given a lift to oil and other commodity prices today, while there have today been further noises from OPEC about their desire, along with allied non-cartel producers, to extend supply reductions into the second half of the year. Increasing U.S. production remains a curtailing force on crude, with data on Friday showing a 14th consecutive rise in U.S. oil rigs, reinforcing expectations for a big supply boost in May.

The German April Ifo rose to 112.9, up from 112.4 in the previous month and higher than we expected, and the highest reading since July 2011. However, the breakdown showed that this was entirely driven by a jump in the current conditions indicator – to 121.1 from 119.5 in the previous month. The more forward looking future expectations reading meanwhile fell back to 105.2 from 105.7, which dampens the picture especially as it ties in with the weaker PMI readings.