World markets tread water as French election looms

Traders work on the floor of the New York Stock Exchange. (Reuters)

LONDON: Euro zone stock markets mostly trod water Thursday as investors turned their attention to the upcoming French presidential election, while Wall Street opened on a firmer footing on the back of a raft of corporate earnings reports, traders said.
Around 1350 GMT, London’s benchmark FTSE 100 index was barely changed, recovering slightly from a weaker start to the session induced by the strong pound.
Frankfurt’s DAX 30 index was also steady, while the Paris CAC 40 added more than 1.2 percent.
“Equity markets are mixed” with the FTSE “underperforming” as a result of the falling oil price and the unwelcome strength of the poud, said Mike van Dulken, analyst at Accendo Markets.
“Germany’s DAX is also down, but to a lesser extent, due to the euro’s strength,” while Wall Street was staging a small rebound following the previous day’s weakness, van Dulken said.
The FTSE remained vulnerable to the rise in the pound in the wake of British Prime Minister Theresa May’s decision to call a snap election, said Joshua Mahony, market analyst at IG trading group.
Eyes were also on the first round vote in the French presidential elections this weekend, with a four-way race making it tough to call on who will go into the run-off.
There are fears a win for far-right leader Marine Le Pen, riding a wave of populism, could see the collapse of the euro zone after she said she would withdraw France from the currency bloc.
“World stock markets may be rangebound ahead of the first round of the French presidential election on Sunday, but the euro has hit a three-week high against the US dollar,” said Mahony.
Markets have been rattled in recent weeks by a series of events that upended the optimism that welcomed in the year.
Trump’s failure to push through key health care reforms last month dealt a huge blow to his chances of passing the tax-cutting, big-spending plan that had helped fan a global rally since his election win in November.
That was followed by a US missile strike on Syria — which hit US-Russian relations — and the ongoing sabre-rattling by North Korea that has fueled worries about nuclear conflict.
An uninspiring Federal Reserve report Wednesday on the US economy also failed to provide any lift.
“Geopolitical angst, a faltering US economy and the UK snap election are consuming investors mindsets,” said Stephen Innes, senior trader at Oanda trading group.
In view of the many uncertainties, investors were reluctant to take any risks, he said.
Crude prices meanwhile rebounded Thursday, boosted by the oil minister of Saudi Arabia saying an output cut among major producers might need to be extended past its June-end cut-off in order to properly deal with a global glut.
But investors kept away from big-name companies after the US government on Wednesday announced a increase in petroleum stockpiles, which fueled worries about demand as the country heads into the crucial holiday season when Americans take to the roads.