Asia Stocks Near 2-Year High, Euro Steady as French Vote Lifts Mood

Asian equities hit a near two-year high on Tuesday, buoyed by a jump in risk appetite following the centrist victory in the first round of the French presidential election that also lifted the euro and pressured safe-haven assets.

The Canadian dollar slid after the U.S. announced new duties averaging 20 percent on Canadian softwood lumber imports. The U.S. dollar strengthened 0.4 percent to C$1.3549.

European stocks also look set for a strong start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 to open up 0.2 percent and Germany’s DAX to start the day 0.3 percent higher. France’s CAC 40, which jumped 4.1 percent to post its biggest one-day gain in almost five years on Monday, is set to open up 0.4 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 percent, hovering near the highest level since June 2015 hit earlier in the session, on its fourth straight day of gains.

“Asian markets appear to be still lingering in the glow of relief after the French election,” said Jingyi Pan, market strategist at IG in Singapore. “The jubilance in markets overnight has also added to the optimism.”

U.S. President Donald Trump’s promise of an announcement on a tax reform plan on Wednesday could offer further impetus to markets, she added.

Japan’s Nikkei rose more than 1 percent to a three-week high. South Korea’s KOSPI also advanced 0.7 percent to the highest level since April 2015.

Chinese shares rose 0.1 percent, while Hong Kong’s Hang Seng gained 0.9 percent. The Chinese index posted its worst day in 2017 on Monday amid signs Beijing will tolerate further market volatility as regulators clamp down on shadow banking and speculative trading.

Indonesian stocks opened at an all-time high, and Malaysian stocks hit their highest level since May 2015.

Australia and New Zealand are closed for the Anzac Day holiday.

“The risk-on sentiment is resulting in foreign inflows into Asia supporting asset prices, and investors are putting North Korean tensions to one side for now,” said Khoon Goh, head of Asia research at Australia and New Zealand Banking Group.

North Korea conducted a massive live-fire drill on Tuesday on the 85th anniversary of the foundation of its army, media reports said on Tuesday. South Korea’s defense ministry could not immediately confirm the report.

Polls show Emmanuel Macron defeating anti-euro nationalist Marine Le Pen by as much as 30 percentage points in the second round of the French presidential election in two weeks.

Overnight, the MSCI World index surged 1.6 percent to touch an all-time high, and holding near that level on Tuesday.

The pan-European STOXX 50 index soared 4 percent, its best day in nearly two years.

On Wall Street, all three major indexes jumped more than 1 percent, with the Nasdaq closing at a record high.

The euro was steady at $1.08645, retaining most of Monday’s 1.3 percent gain. On Monday, it posted its strongest one-day performance in 10½ months, which lifted the common currency to a 5½-month high.

The euro’s earlier gains had weighed on the dollar index , which touched a four-week low overnight. The index, which tracks the greenback against a basket of trade-weighted peers, was marginally higher at 99.134, failing to make up most of Monday’s 0.9 percent loss.

The dollar advanced 0.3 percent to 110.05 yen on Tuesday, extending Monday’s 0.5 percent jump as investors sold off the safe-haven yen.

A strong earnings season in the U.S. has also lifted investors’ spirits, with 77 percent of the 100 S&P 500 companies that have reported first-quarter results so far beating profit expectations.

This week is set to be the busiest in at least a decade, with over 190 S&P 500 companies reporting first-quarter results, including heavy weights Alphabet and Microsoft.

This week in Asia, investors await a raft of economic indicators, including first-quarter inflation data for Australia and Japan, the Bank of Japan’s interest rate decision, Japan’s March unemployment rate and first-quarter gross domestic product for Taiwan and South Korea.

In commodities markets, oil prices crept higher after six straight sessions of losses, although gains were capped by fears that pledged output cuts by major producers may not be able to rein in oversupply.

U.S. crude gained 0.5 percent to $49.47 a barrel, but hovered close to the lowest level in almost four weeks hit on Monday.

Global benchmark Brent climbed 0.5 percent to $51.84 after also hitting a four-week low overnight.

Gold slipped 0.15 percent to $1,273.22 an ounce, remaining near a two-week low touched overnight.