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● Stock markets extend rally on French election relief; Dax at record
● Euro adds to gains, French bond yields dip
● Traders eye Nasdaq 6,000 as company earnings slip into fast gear
The relief over the French election, which boosted investor sentiment at the start of the week, is continuing to resonate.
The CAC 40, France’s blue-chip equity index, which jumped 4.1 per cent on Monday to its best close in nine years, is up another 0.1 per cent. Germany’s Dax is at a new record high of 12,481, up 0.2 per cent.
The gains come as investors welcome the likelihood that Emmanuel Macron, the centrist candidate, will defeat Marine Le Pen, the far-right leader, in France’s presidential run-off slated for May 7.
French 10-year sovereign debt yields are down by 0.01 percentage points (1 basis point) to 0.76 per cent, reducing the premium investors demand over benchmark German Bunds to 42 basis points. (Yields fall when prices rise.) Just a couple of weeks ago that spread, which represents the perceived credit risk that investors attach to Paris’ paper, was above 75bp.
The euro is up 0.1 per cent to $1.0880, taking a breather after surging 1.3 per cent in the previous session to its best level in five months.
What to watch
Can the Nasdaq Composite hit 6,000 for the first time?
The US technology-heavy equity benchmark closed on Monday at a record high of 5,983.8 as investors remain confident on the prospects for IT and internet-related groups.
The 2,534 member, $9tn market cap Nasdaq has gained 11.2 per cent in 2017, easily outpacing the 6 per cent of the broader S&P 500 index.
Strong performances from market giants like Apple, Alphabet (the owner of Google), Microsoft, Amazon and Facebook have powered the Nasdaq of late.
And with many of those companies reporting their earnings results in the next few days, equity bulls will be hoping some well-received reports can help push the Nasdaq and indeed the broader market to fresh highs.
The reduction in market anxiety is continuing to weigh on the Japanese yen – a magnet in times of stress – which is off 0.4 per cent to ¥110.17. The dollar index, a measure of the US currency against a basket of global peers, is down 0.1 per cent at 99.01.