With the first round of votes tallied after France’s weekend national election, the France country-specific exchange traded fund surged on a relief rally Monday, enjoying its largest one-day surge in five years.
The iShares MSCI France ETF (NYSEArca: EWQ), the sole France-specific exchange traded fund trading in the U.S., jumped 5.6% Monday, its best daily gain since 2012, reports Ryan Vlastelica for MarketWatch.
France’s markets have been relatively subdued in recent weeks as traders refrained from taking big risks ahead of the presidential elections.
However, French equities rallied in what appeared to be a relief trade after Emmanuel Macron, an independent centrist and pro-European Union candidate led at the polls, closely followed by Marine Le Pen, the leader of the far-right National Front and proponent of a “Frexit” or French exit from the E.U.
“The French elections gave the markets a sigh of relief,” Chuck Butler, managing director with EverBank Global Markets, said in a note, according to CNN Money. “A lot of the risks that were associated with the French election have been put on the back burner.”
Macron and Le Pen will go head-to-head in the final round May 7. A poll late Sunday from Ipsos/Sopra Steria indicated that Macron would likely win the runoff by 62% to 38%, further supporting the relief trade as investors anticipate a return to the status quo.
The results are seen as a turn against calls for scrapping the euro currency and breaking down the European Union, a scenario widely feared as a big destabilizer for the euro and trading bloc.
France ETF traders have been worried of a Le Pen win as the fund experienced a one-day outflow of $57.4 million, its largest one-day redemption since December 2013. On the other hand, about $37.2 million flowed into the ETF on Monday, according to FactSet data.
For more information on the French markets, visit our France category.