Europe Stocks Steady Before Sunday First-Round Vote in France

How Will Markets React to Elections in France?

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

The Stoxx Europe 600 Index 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 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. The European regional benchmark saw a weekly drop of 0.6 percent, its steepest since late January.

  • French voters go to the polls in a first round vote, with Macron and Le Pen the front-runners to advance to the final election in May. 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 Mélenchon,” according to Lars Lundqvist, a senior economist at Roubini Global Economics. “If either Le Pen or Mélenchon make it to the second round, markets would stay on their toes a bit longer.”
  • Danone dropped as much as 2.9 percent after reporting the third consecutive quarterly drop in volume and including its $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 recent acceleration in global-growth momentum, and aren’t reflecting an “obvious political risk discount,” Deutsche Bank 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 2016 relative to those for euro-area blue chips.
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