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Future of France: Macron and Le Pen Go Head-to-Head

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Markets surge as Macron and Le Pen win the French vote, China's the odd one out, and Trump gets close to wrapping up his first 100 days. Here are some of the things people in markets are talking about today.

French election

The first round of voting in the French presidential election saw centrist candidate Emmanuel Macron and far-right nationalist Marine Le Pen make it through to the second round runoff scheduled for May 7. Republican candidate Francois Fillon, who came in third, backed Macron for the May vote, with early polls suggesting he would beat Le Pen by more than 20 percentage points

Relief rally

Emmanuel Macron's victory in the vote has led to a huge relief rally across markets. France's CAC 40 Index was 4.2 percent higher at 5:21 a.m Eastern Time, Germany's Dax added as much as 2.9 percent to reach an intraday record, while the wider Stoxx 600 Index gained 1.9 percent. France's 10-year bond yield fell 11 basis points, while the spread to German bunds narrowed 20 basis points, the tightest since January. The euro was trading at $1.0875, having climbed to the highest level against the U.S. dollar since November in the immediate aftermath of the results. S&P 500 futures added 1.2 percent as the risk-on rally spread beyond Europe. 

Going its own way

Chinese stocks didn't get the global rally memo, however. Following a record stretch without falling more than 1 percent in a single session, China's Shanghai Composite Index fell 1.4 percent, its biggest one-day loss since Dec. 12. The index is down almost 5 percent from its mid-April peak, becoming the worst performing national benchmark in the world. Correlation ratios between the Chinese stock gauge and other global benchmarks is now near zero. This selloff is being driven by a crackdown on leverage, a move which is also weighing on iron ore prices

May's big June lead

British Prime Minister Theresa May's Conservative Party has a lead of at least 20 percentage points over the Labour Party in the most recent polls. May has said that a large victory in the election would strengthen her hand in negotiations with the EU over Brexit. But, should Macron win in France as expected, then that could make her task much more difficult. Analysts at JPMorgan Chase & Co. and Bank of America Corp. are telling clients that the U.K. is still on track for a "hard Brexit." 

100 days

Donald Trump will have been President of the United States for 100 days on Saturday April 29. It is shaping up to be a busy week for the president before that benchmark is reached, with Friday's deadline to avoid a government shutdown fast approaching. Trump is also expected to release his tax plan this week, which won't include a border-adjusted tax, according to a senior administration official. 

What we've been reading 

This is what's caught our eye over the weekend.

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