Europe midday: Stocks flat as investors eye US tax announcement, ECB comments

European equities struggled to hold on to previous gains and were little changed by midday as investors looked to a potential tax reform announcement in the US later in the day and the European Central Bank’s press conference on Thursday.

The Stoxx Europe 600 index and Germany’s DAX were flat at 387.24 and 12,457.27, respectively, while France’s CAC was unchanged at 5,279.72.

Meanwhile, Brent crude was down 0.52% to $51.83 per barrel and West Texas Intermediate fell 0.48% to $49.32.

In currency markets, the euro was down 0.35% versus the dollar to 1.0888, fell 0.17% against the pound to 0.84942 and was 0.24% lower against the yen at 121.08.

The euro had gained at the weekend after centrist Emmanuel Macron made it to the run-off on 7 May for the French presidency. Recent opinion polls show that Macron is about 20 points ahead of far-right rival Marine Le Pen, diminishing political risk for the euro as Le Pen’s only hope could hinge on low turnout on voting day.

Thursday’s ECB meeting is the next major event for the euro. The single currency gained against the dollar on Tuesday on reports that ECB sources see the scope for a potential change of tack on the policy settled at the June meeting.

Michael Hewson, chief markets analyst at CMC Markets, said: “The ECB has already dialled back its bond purchase program this month to €60bn a month from €80bn, so any new moves remain highly unlikely in the short term, however Friday’s new flash EU CPI numbers could well reignite the tapering debate anew.”

This was echoed by Ipek Ozkardeskaya, senior market analyst at London Capital Group, who expects the ECB to keep policy unchanged, but said that markets haven been calling for a more hawkish accompanying statement from the bank’s president Mario Draghi.

“He is expected to give more details about the quantitative easing exit plans at the June meeting, six months earlier than previously anticipated … It is possible that the markets have gone well ahead of themselves, given that we could also expect the ECB to be less emotional and more pragmatic and wait until the official result of the French election before moving into action," she said.

Investors were also awaiting a big announcement on tax reform from US President Donald Trump later in the day amid expectations he will reaffirm his commitment to slash corporation tax to 15% from 35%.

In corporate news, Gucci and Saint Laurent owner Kering gained 8.84% after positing 31% rise in first quarter revenue to €3.57bn.

Credit Suisse rose 1.83% after the lender reported a first quarter profit of 596m Swiss francs and said it will raise 4bn Swiss francs in capital.

Daimler slipped 0.34% despite the Mercedes-Benz car maker saying that quarterly profit doubled and raising its outlook for the rest of the year, while PSA Group fell 1.69% despite saying that first quarter sales grew 4.9%.

French industrial gas company Air Liquide rose 0.63% after it posted a 38.5% rise in first quarter revenue year-on-year.