Europe midday: CAC buoyed after polls show Emmanuel Macron victory
European stocks were little changed on Thursday, but the CAC 40 gained with days to go until the first round of voting for the French presidential election, while the euro hit a three-week high against the dollar.
France's CAC 40 is on track for its best day since 1 March, earlier it was up 1% to 5.053.79 after a poll signalled that centrist, europhile Emmanuel Macron would likely win the contest.
At midday, the Stoxx Europe 600 index and Germany’s DAX were flat at 377.25 and 12,019.85, respectively, but France’s CAC rose 0.71% to 5,039.12.
Lately, European stocks were on the back foot after polls showed that far-left, eurosceptic Jean-Luc Mélenchon was gaining ground on frontrunners Macron and far-right Marine Le Pen.
Recent polling showed that Macron and Le Pen were on 23-34% of the vote, with Mélenchon a point or two behind followed by scandal-hit conservative Francois Fillon, who has also been making gains, behind by three points.
But with about a third of voters undecided until polls open on Sunday, any two of the top four candidates could go through to run-off on 7 May.
The euro extended its gains against the dollar, rising as much as 0.62% to 1.0776 on Thursday morning, the highest level since 29 March when it reached 1.084, on concerns about US president Donald Trump’s ability to push through his economic policies and with the looming French election.
At midday, the euro was up 0.41% versus the pound to 1.0755 and rose 0.13% against the pound to 0.83942.
Neil Wilson, senior market analyst at ETX Capital said that volatility in the euro has peaked at its highest since before the UK’s EU referendum last June, as markets weigh the prospects of either Le Pen or Mélenchon – or both - making the second round.
“The killer scenario for the euro would be if both candidates make the 7 May run-off as it would raise the very real possibility of France exiting the euro… We’re looking at contingency plans in the event of a Le Pen-Melenchon run-off as this would spark a big selloff in the euro and French government bonds, as well as bank stocks.”
Meanwhile, Brent crude rose 1.01% to $53.47 per barrel and West Texas Intermediate was up 0.89% to $51.31.
In corporate news, the CAC was also by boosted by earnings season as Publicis was up 2.82%, and on track for its best performance since last December, after the advertising agency reported a smaller than expected fall in first quarter revenue.
French drinks company Pernod Ricard rose 1.72% after it posted a 1% increase in third-quarter sales.
Swiss engineer ABB gained 1.26% after it said that income rose on sale of its high-voltage cable business, although first-quarter revenue slipped to $7.85bn from last year.
Unilever added 1.32% after the consumer products after it upped its quarterly dividend 12% as underlying sales grew 2.9% in the first three months of the year, despite sales volumes remaining in the red for the third consecutive quarter.
On the data front, Eurozone construction increased 6.9% month-to-month in February, while year-over-year output jumped to +7.1% from an upwardly revised -5.1% in January.
Eurozone consumer confidence figures will be released at 1500 BST.