World stocks rise on
French vote relief, Trump tax plan talk
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[April 25, 2017]
By Nigel Stephenson
(Reuters) - World stocks hit record highs on Tuesday, with investors'
relief at centrist Emmanuel Macron's victory in the first round of the
French presidential election supported by speculation about U.S. tax
Wall Street looked set to join the party, with index futures indicating
U.S. stock markets would open higher <ESc1> <1YMc1>.
Safe-haven assets such as gold and the Japanese yen retreated as opinion
polls suggested Macron would easily beat far-right, anti-EU candidate
Marine Le Pen in a May 7 run-off vote for the French presidency.
The yield gap between French and German short-term government bonds, a
closely watched measure of political risk in the euro zone, hit its
lowest in almost three months. <DE2FR2=RR>.
"It's risk-on. The French presidential election was an obvious risk, and
it now looks like, barring a shock, Macron will gallop ahead and the
market will have its candidate in place, and thatís another hurdle
overcome this year," said BNY Mellon currency strategist Neil Mellor, in
European shares measured by the STOXX 600 index <.STOXX> rose by 0.4
percent, after adding 2.1 percent on Monday. French shares <.FCHI> were
up 0.4 percent, having risen 4.1 percent on Monday in their biggest
daily gain since August 2012.
European bank shares <.SX7P> edged higher after big gains on Monday. The
European Central Bank said in a quarterly survey of lenders that while
banks would tighten access to credit for companies in the second
quarter, lending volumes were still expected to rise.
MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> rose 0.6 percent, hovering near its highest level since
June 2015 hit earlier in the session, on its fourth straight day of
Japan's Nikkei <.N225> rose more than 1 percent to a three-week high.
South Korea's KOSPI <.KS11> also advanced 0.7 percent to its highest
level since April 2015.
These gains helped push MSCI's world stocks index, comprising shares
from 46 countries <.MIWO00000PUS> to a fresh all-time high of 454.55
points. It last traded just shy of that level, up a quarter percent on
The euro added to Monday's gains against the dollar, rising 0.1 percent
to $1.0876, albeit off Monday's high of $1.0940.
The yen, however, pulled back 0.7 percent to 110.48 per dollar. Sterling
rose 0.3 percent to $1.2824 and 0.1 percent to 84.80 pence per euro.
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People walk past an electronic board showing Japan's Nikkei average
outside a brokerage in Tokyo, Japan, November 18, 2016. REUTERS/Toru
The Canadian dollar fell 0.5 percent to C$1.3561 per U.S. dollar after
the United States announced new duties averaging 20 percent on Canadian
softwood lumber imports.
French and German 10-year government bond yields both rose. The
gap between them at one point hit its lowest since early November. The
two-year yield spread was its narrowest since late January.
"Markets turn the page on Le Pen risks already," Commerzbank strategist
Rainer Guntermann, said in a note titled "Au revoir Marine".
TRUMP TAX TALK
With one of the year's major risks to markets seen less acute, markets
were also looking ahead to other factors, including U.S. President
Donald Trump's promise to announce on Wednesday "a big tax reform and
The Wall Street Journal reported Trump wanted to cut the corporate tax
rate to 15 percent. The White House budget director told Fox News on
Monday Trump's announcement would focus on principles, ideas and rates.
"I'm becoming a little concerned over the presidentís big announcements,
especially since we havenít seen any major legislative achievement so
far and he will be marking his 100th day in the White House this
Saturday," FXTM chief market strategist Hussein Sayed said in a note.
Gold, sought as a shelter for wealth in turbulent times, fell 0.4
percent to just under $1,270 an ounce.
Copper reversed falls in Asia and headed higher, last trading 0.4
percent higher at $5,682 a tonne.
Oil prices steadied after six straight days of losses. Brent crude, the
international benchmark, was up 5 cents on the day at $51.65 a barrel.
(Additional reporting by Nichola Saminather in SINGAPORE, Jemima Kelly,
Jamie McGeever, Marc Jones and John Geddie in London; Editing by Jon
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