World stocks hit record highs on Tuesday, with investors' relief at centrist Emmanuel Macron's victory in the first round of the French presidential election supported by speculation about U.S. tax reform.
The financial market looked set to join the party, with index futures indicating U.S. stock markets would open higher.
Safe-haven assets such as gold and the Japanese yen retreated as opinion polls suggested Macron would easily beat far-right, anti-EU candidate Marine Le Pen in a May 7 run-off vote for the French presidency.
The yield gap between French and German short-term government bonds, a closely watched measure of political risk in the euro zone, hit its lowest in almost three months.
"It's risk-on. The French presidential election was an obvious risk, and it now looks like, barring a shock, Macron will gallop ahead and the market will have its candidate in place, and that’s another hurdle overcome this year," said BNY Mellon currency strategist Neil Mellor, in London.
European shares measured by the STOXX 600 index rose by 0.4 % , after adding 2.1 % on Monday. French shares were up 0.4 % , having risen 4.1 % on Monday in their biggest daily gain since August 2012.
European bank shares edged higher after big gains on Monday. The European Central Bank said in a quarterly survey of lenders that while banks would tighten access to credit for companies in the second quarter, lending volumes were still expected to rise.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 %, hovering near its highest level since June 2015 hit earlier in the session, on its fourth straight day of gains.
Japan's Nikkei rose more than 1 % to a three-week high. South Korea's KOSPI also advanced 0.7 % to its highest level since April 2015.
These gains helped push MSCI's world stocks index, comprising shares from 46 countries to a fresh all-time high of 454.55 points. It last traded just shy of that level, up a quarter % on the day.
The euro added to Monday's gains against the dollar, rising 0.1 % to $1.0876, albeit off Monday's high of $1.0940.
The yen, however, pulled back 0.7 % to 110.48 per dollar. Sterling rose 0.3 % to $1.2824 and 0.1 % to 84.80 pence per euro.
The Canadian dollar fell 0.5 % to C$1.3561 per U.S. dollar after the United States announced new duties averaging 20 % on Canadian softwood lumber imports.
French and German 10-year government bond yields both rose. The gap between them at one point hit its lowest since early November. The two-year yield spread was its narrowest since late January.
"Markets turn the page on Le Pen risks already," Commerzbank strategist Rainer Guntermann, said in a note titled "Au revoir Marine".
Trump tax talk
With one of the year's major risks to markets seen less acute, markets were also looking ahead to other factors, including U.S. President Donald Trump's promise to announce on Wednesday "a big tax reform and tax reduction".
The Wall Street Journal reported Trump wanted to cut the corporate tax rate to 15 % . The White House budget director told Fox News on Monday Trump's announcement would focus on principles, ideas and rates.
"I'm becoming a little concerned over the president’s big announcements, especially since we haven’t seen any major legislative achievement so far and he will be marking his 100th day in the White House this Saturday," FXTM chief market strategist Hussein Sayed said in a note.
Gold sought as a shelter for wealth in turbulent times, fell 0.4 % to just under $1,270 an ounce.
Copper reversed falls in Asia and headed higher, last trading 0.4 % higher at $5,682 a tonne.
Oil prices steadied after six straight days of losses. Brent crude, the international benchmark, was up 5 cents on the day at $51.65 a barrel.