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The ASX is set for a upbeat start, reckons IG analyst Gary Burton:
As an overview, the market largely got [the French polls] right, as the VIX volatility indicator, a measure 3 month forward option pricing, did not move to extreme levels and should settle lower in today's trade.
This early retreating risk may be the big game changer for the markets, as US data and earnings continue to remain supportive of the current rally, with the recent commentary around the time table for tax cuts that saw the S&P 500 close positive for the week and the NASDAQ close towards all-time highs.
With early US company reporting on revenue and earnings per share growth currently showing over 84% have beaten analysts' expectations, around 75% of the S&P 500 will be reporting this week.
Overnight the US consumer confidence numbers will come through with an expected rise from 124 to 125.6 again a positive for traders on the long side of the market. For today, investors will be focused back on the market data this week including German business confidence out at 6pm today and also expected to be positive and adding to market sentiment for the bulls.
Our ASX market will be closed for the ANZAC holiday tomorrow so there may be some further price volatility into today's close as the first European markets open later in the evening, but a very positive day expected.
European assets look set to benefit from the weekend's vote, writes AMP Capital's Shane Oliver:
With a majority of the French in favour of the Euro and highly negative to the far right National Front (partly for historical reasons) and the polling gap in favour of Macron in excess of 20% which is well beyond the standard error, our base case remains that Macron will win on May 7.
This would be a big positive for Eurozone assets. It would reinforce the impression that the populists are not winning in Europe. While some see the German election in September as a threat this is very unlikely as the contest looks to be between Angela Merkel and the Social Democrats under Martin Schulz who are even more pro Europe, with the nationalist Alternative for Deutschland polling very poorly.
This in turn should help reduce Eurozone break up fears. While Italy remains a risk for next year, this all comes at a time when Eurozone assets are relatively cheap globally and Eurozone economic data continues to improve. All of which is consistent with retaining a large exposure to Eurozone shares.
For Australia, the outcome of the first round of the French election is unlikely to have a major impact beyond keeping in place the currently favourable global growth backdrop. That said there is likely to be a mild relief rally in the Australian share market today and the $A has already had a 0.4% bounce against the $US reflecting its "risk on" status.
And here's the take from Societe Generale strategist Kit Juckes:
​There is a huge amount to be said in the weeks and months to come about the historic failure of the two establishment parties in France to make it through to the second round of the Presidential election, and indeed about what that means for upcoming Parliamentary elections.
But for now, the biggest takeaway from the first round result (and while the final count isn't know yet, it results in a vote-off between Emmanuel Macron and Marine Le Pen) is that pollsters did a far better job of predicting the outcome in France than they did for the EU referendum in the UK or the US Presidential election.
And it' s worth noting that the first poll released after the first round vote ended, from iPsos, sees a 62-38 outcome in favour of M Macron in the second round. That's what the FX market is going to trade off in the days ahead and indeed is already doing. The Euro is on its way (up) and risk assets and currencies are heaving a sigh of relief.
Investors have swung back into a risk-taking mode on speculation that pro-growth centrist Emmanuel Macron will become France's next president after the first round of voting.
The euro jumped the most since December and the yen retreated, while US stock-index futures rose.
The shared currency traded up by as much as 2 per cent higher to $US1.093 in early Monday trade, before easing to last fetch $US1.089. paring gains of as much as 2 per cent that took it to the highest since November. The Aussie dollar gained as much as half a penny as word emerged of a Le Pen-Macron second round contest, before paring half of those gains to last sit at 75.6 US cents.
A place for Macron in the second round avoids investors' nightmare scenario of a contest between the anti-euro Le Pen and the Communist-backed Jean-Luc Melenchon.
"This is the perfect scenario the market was desperately looking for," said Sebastien Galy, a macro strategist at Deutsche Bank.
Equities across Asia are likely to see gains as trading begins for the week, although futures pricing suggests a a flat start for the ASX. Miners should receive a boost from a 4.4 per cent jump in the iron ore price on Friday evening to $US68.22.
Gold dropped and 10-year Treasury futures fell to the lowest since April 11.
French government projections showed far-right nationalist Marine Le Pen and Macron won the first round of the election, triggering a runoff on May 7. Le Pen, who wants to take France out of the euro and clamp down on immigration, has trailed Macron, a committed globalist, in almost every opinion poll for the runoff by a margin of some 20 percentage points.
"The market will likely fully price in the outcome of the second round today in favour of Mr Macron," said Jordan Rochester, London-based foreign exchange strategist at Nomura.
"If that view is right then Emmanuel Macron ought to be the next president of France. And that in turn should be positive for the French economy and for broader European economic stability."
Good morning and welcome to the Markets Live blog for Monday.
Your editors today are Patrick Commins and Myriam Robin.
This blog is not intended as investment advice.
Fairfax Media with wires.
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