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The market reaction after the French election

• The euro remains stronger against major rival currencies, after a big surge during Asia trading. After climbing to a five-month high of $1.0935, the euro is up 1.1 per cent at $1.0840

• Investors are snapping up French bonds, and the premium over German Bunds has compressed. This important market relationship has narrowed to to its lowest level since late January at 48 basis points with French 10-year bond yields lower by 11 basis points to 0.82 per cent, while 10-year Bund yields are up 6 bps 0.34 per cent.

• The CAC 40, rose 4 per cent in opening trade, led by financial stocks. The move sets the benchmark Paris index on course for its best day’s trading since 2015. It now beats the year-to-date gain seen for Germany’s Dax — 7.9 per cent versus 7.4 per cent. In dollar terms the CAC 40 is extending its outperformance versus Wall Street, up 11.1 per cent against a rise of 4.9 per cent for the S&P 500.

• Wider European stock indices are also higher. The FTSE 100 in London up 1.5 per cent while the Xetra Dax 30 in Frankfurt gains 2.4 per cent. The region-wide Euro Stoxx 600 shows a rise of 1.8 per cent.

Analysts described the trading pattern as a relief rally, although there were some doubts about how far it was likely to run.

“Now that the initial adjustment higher has taken place, we do not expect the French elections to have much further impact on the euro in the near-term,” said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi.

“The market’s focus will begin to shift away from political risk in Europe, and more on to the improving economic fundamentals which should begin to offer the euro more support.”

Marc de-Muizon at Deutsche Bank said the market was “likely to feel relatively comfortable with the residual risk of a second round contest between Macron and Le Pen.”

Additional reporting by Mehreen Khan and Nicholas Megaw