The euro briefly surged to a five-month high against a basket of currencies after centrist candidate Emmanuel Macron won the first round of a hotly contested French election vote, an outcome broadly considered the most market-friendly.
Immediately after the vote on Sunday, the euro surged to $1.0940, its highest level against the dollar since November last year, before retreating to around $1.0869.
It rose against the pound and the Swiss franc too and stocks across Europe and Asia climbed as investors pulled out of assets considered safest to hold during times of economic uncertainty or political turmoil, like gold, Japan’s yen and core government bonds.
The FTSE 100 was up 1.5 per cent in early trading while Paris' CAC 40 added almost 4 per cent. Germany's DAX rose more than 2 per cent.
Analysts and strategists were quick to point out that the outcome lessens the risk of an anti-establishment shock, like the UK’s vote last year to quit the European Union and Donald Trump’s US presidential election victory in November.
“Macron will be reassuring to markets, with his pledge to lower corporate taxes and to lighten the administrative burden on firms. He basically represents continuity,” said Octavio Marenzi, CEO of Opimas, a capital markets management consultancy.
“While the markets would have preferred Trump-style deregulation, no candidate, including Macron, would dare touch such an agenda in France," he added.
Dean Turner, an economist at UBS Wealth Management said that “it is likely that we see a recovery in risk appetite toward French and other European markets”.
Mr Macron is widely tipped to win the final vote, due to take place on 7 May, and will be facing far-right leader Marine Le Pen who secured 21.6 per cent of the vote on Sunday.
According to the latest polling of voters' intentions in the second round, Mr Macron is forecast to beat Ms Le Pen by 62 per cent to 38 per cent, with many political figures quick to join the 'anyone but Le Pen camp'.
