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US bank stocks are soaring on French election relief

  • Goldman Sachs, Bank of America, Citigroup and other banks with global franchises jumped Monday following the preliminary French election results.
  • Deutsche Bank closed up more than 11 percent in U.S. trade, as the election removed key overhang on banks operating in the European zone.
  • U.S. bank stocks should get some more help later in the week, as President Donald Trump is expected to release more information on his plans for tax reform.
Statues stand outside a Deutsche Bank AG branch in Frankfurt, Germany, on Thursday, Oct. 20, 2016.
Krisztian Bocsi | Bloomberg | Getty Images
Statues stand outside a Deutsche Bank AG branch in Frankfurt, Germany, on Thursday, Oct. 20, 2016.

Global banking stocks rallied after it was announced Sunday that centrist Emmanuel Macron will advance in the French election to take on Marine Le Pen, a far-right candidate. Investors rushed into bank stocks, fleeing safe havens like government bonds and gold as interest rates moved higher.

This was the scenario nervous traders going into the weekend wanted most, and it removed a heavy uncertainty overhanging global markets and the euro since the start of the year.

Shares of Deutsche Bank closed up more than 11 percent on Monday, as investors took the results from the first round of the French presidential election to mean it will be business as usual for banks in the European zone.

U.S. banks with global franchises also gained on Monday. Goldman Sachs and Citigroup each closed almost 3 percent higher, while Bank of America closed up more than 4 percent.

The regional bank (KRE) and bank (KBE) ETFs of the S&P 500 both closed up more than 2 percent on Monday.

The euro rose sharply against the dollar on Sunday, hitting a five-and-a-half month high, and it continued climbing Monday morning, as currency markets globally were comforted by the results of France's vote.

The yield on the 10-year Treasury jumped to 2.31 percent from 2.25 percent Friday before the French election results.

U.S. bank shares may get more help later in the week, as President Donald Trump is scheduled Wednesday to release more information on his plan for tax reform.

Financial stocks have largely led the post-election market rally because the sector is expected to benefit the most from Trump's pro-growth policies of tax reform and deregulation.

Watch: Impact of French election on U.S. stocks

— CNBC's Gina Francolla contributed to this report.