Stocks gain ahead of French election
The euro and stocks on major markets recovered yesterday as a market-friendly presidential candidate held the lead ahead of Sunday’s first-round election in France.
Former French finance minister, Emmanuel Macron, remained atop the polls for Sunday’s French vote, but the election is still a four-way battle in the first round on April 23. Should Macron rank first or second in Sunday’s poll, he is seen easily winning the run-off vote on May 7 after remaining candidates are eliminated.
However, after surprises in last year’s US election and the UK Brexit referendum, voter indecision and low voter turnout could catch markets wrong-footed yet again.
France’s CAC stock index jumped 1.7 per cent on its strongest daily performance since March 1.
On Wall Street, stocks rose as traders continued to bet on a strong earnings reporting season. Profits at S&P 500 index companies are estimated to have risen 11.1 per cent in the first quarter.
“As we see a steady stream of earnings, on balance the season has been better and that’s helping the market today,” said Art Hogan, chief market strategist at Wunderlich Securities in New York, yesterday.
The Dow Jones Industrial Average rose 99.16 points, or 0.49 per cent, to 20,503.65, the S&P 500 gained 10.19 points, or 0.44 per cent, to 2,348.36 and the Nasdaq Composite added 32.61 points, or 0.56 per cent, to 5,895.65.
The pan-European FTSEurofirst 300 index rose 0.25 per cent and MSCI’s gauge of stocks across the globe gained 0.49 per cent.
Emerging market stocks rose 0.65 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.7 per cent higher, while Japan’s Nikkei lost 0.01 per cent.
Currency traders said short-term players were closing out positions taken in anticipation of euro weakness before the French election, emboldened by the steady stream of polls confirming that Mr Macron would lead returns on Sunday.
“Short euro is still one of the larger positions out there. No risk on the table means take some of that off,” said BMO strategist Stephen Gallo.
“(But) there is still no fundamental reason for the euro to be rising here.”
The US dollar index fell 0.29 per cent, with the euro up 0.56 per cent to $1.0769.
The Japanese yen weakened 0.34 per cent versus the greenback at 109.25 per dollar, while the British Sterling was last trading at $1.2828, up 0.40 per cent on the day.
Meanwhile, oil prices fell further after Wednesday’s steep losses, with rising US production weighing against comments from leading Gulf oil producers that an extension to Opec-led supply cuts was likely.
United States crude rose 0.1 per cent to $50.49 per barrel and Brent was last at $53.03, up 0.19 per cent on the day.