Asian stocks ex-China rally on French election relief

Stock markets across Asia except China rallied this Monday morning as investors breathed a sigh of relief after Macron and Le Pen won the first round of the French elections as the polls had suggested.

Scorecard

Japan’s Nikkei index jumped 1.27% or 235 points. Stocks in Australia and New Zealand added 0.17% and 0.40%, respectively, while South Korea’s Kospi gained 0.22%.

Stocks in Japan rose as the Yen was offered across the board. USD/JPY jumped to a high of 110.52 before trimming gains to trade around 110.00 levels.

What’s behind the risk-on?

Many in the markets feared Melenchon’s late surge could translate into a victory in the first round. Le Pen-Melenchon was seen as the worst case scenario. However, the polls finally got it right after last year’s Brexit and US election debacle. Thus, risk-off sentiment faded in Asia.

China stocks drop in anti-speculation drive

Shanghai Composite dropped 1.6% as investors reacted to China’s latest efforts to curb the casino-like speculation in the markets. The drop in the mainland Chinese stocks also weighed over Hong Kong’s Hang Seng, pushing it lower by 73 points or 0.30%.