Europe stocks rise with French vote on horizon

LONDON: European stock markets attempted to rebound Monday despite jitters over the first round of French elections taking place this weekend.

“European markets are in recovery mode, with widespread gains taking shape,” said Shore Markets analyst Joshua Mahony.

“Despite ongoing concerns around this weekend’s French parliamentary election, French stocks are on the rise as investors buy the dip that saw the CAC lose almost 10 percent in a month,” he said, referring to the Paris benchmark stock index CAC 40.

President Emmanuel Macron threw markets into turmoil by calling the snap election after his centrist party was trounced by the far-right National Rally (RN) in an EU vote two weeks ago.

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Opinion polls showed the RN garnering 35-36 percent of voting intentions for Sunday’s first round, ahead of a left-wing alliance on 27-29.5 percent and Macron’s centrists in third on 19.5-22 percent. The second round will be held on July 7.

“The positive tone being taken by European markets could yet come into question as we get closer to this potential seismic shift in French politics,” cautioned Mahony.

Investors meanwhile set aside a key survey showing that German business sentiment unexpectedly fell in June, pouring cold water on hopes Europe’s biggest economy is on course for a strong rebound.

The Ifo institute’s confidence barometer, based on a survey of around 9,000 companies, declined to 88.6 points from 89.3 in May. It was lower than a forecast of 89.8 points from analysts surveyed by financial data firm FactSet.

“Today’s results add to the growing stream of indicators sending mixed signals on where the eurozone’s biggest economy is heading,” said Oxford Economics analyst Mateusz Urban.

“Overall, we think that the German economy will struggle to grow in the near-term.”

Elsewhere, Asian equities were mixed Monday after last week’s poor run as investors look ahead to the release of key US inflation data, while eyes are also on Japan as the yen sits around three-decade lows.