European stocks steady before French election

Bloomberg

Sun, Apr 23, 2017 - Page 14

European shares were little changed on Friday, while France’s stock market dropped in the final trading session before the nation’s presidential election today.

The STOXX Europe 600 closed little changed at 378.12 in London. France’s CAC 40 Index fell 0.4 percent, trimming an earlier drop of as much as 1 percent.

The European regional benchmark saw a weekly drop of 0.6 percent, its steepest since late January.

The latest Opinionway poll showed support for independent candidate Emmanuel Macron and far-right contestant Marine Le Pen was stable at 23 percent and 22 percent respectively.

French voters go to the polls in a first-round vote, with Macron and Le Pen the frontrunners to advance to the final election next month.

The murder of a policeman on the Champs-Elysees has forced an early end to campaigning for the leading candidates, with the race wide open, according to polls.

“The possibility of a hard-right Marine Le Pen presidency has worried markets for some time, but another risk scenario to consider is the victory of far-left leader Jean-Luc Melenchon,” Roubini Global Economics senior economist Lars Lundqvist said. “If either Le Pen or Melenchon make it to the second round, markets would stay on their toes a bit longer.”

Danone SA dropped as much as 2.9 percent after reporting the third consecutive quarterly drop in volume and including its US$10 billion takeover of WhiteWave Foods Co in its organic growth for the year.

European equities are still priced for a slight valuation premium linked to acceleration in global growth momentum and are not reflecting an “obvious political risk discount,” Deutsche Bank AG strategists, including Sebastian Raedler, wrote in a note.

Investors in European lenders are getting cold feet. Bets for swings in lenders’ stocks have jumped and options reached their highest prices since February last year relative to those for euro-area blue chips.