Paris stock market falls after attack, before French elections

By
AFP
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Paris stock market falls after attack, before French elections

The Paris stock market fell on Friday after the latest violent attack in the city and as traders awaited a hotly-contested presidential election in France.

London was weighed down by much weaker than expected British retail sales data, while Frankfurt gained as separate figures showed the eurozone economy grew at its fastest pace in six years in April.

US stocks finished lower, burdened by caution over the French election.

In Asia on Friday, Tokyo's Nikkei closed up one percent as exporters were boosted by some weakness for the yen and comments from Bank of Japan Governor Haruhiko Kuroda that he would maintain a loose monetary policy, despite an improvement in the economy.

Oil prices fell sharply on worries about excessive supplies.

Paris incident rocks election

Markets were still feeling the reverberations after a known terror suspect shot dead a French policeman and wounded two others Thursday on Paris's Champs Elysees, in an attack claimed by Daesh days before the first election round on Sunday.

But while tension in the French capital was felt on trading desks, the market's reaction was far from dramatic, analysts said.

A four-way split in the presidential race is leaving analysts unable to work out which two candidates are likely to make it into a run-off election two weeks later.

There was talk that undecided voters could swing towards far-right candidate Marine Le Pen in response to the attack. Fears are that Le Pen would push for France's exit from the European Union if elected.

But polls suggest that whoever faces her in the second round will win.

"The sense that Marine Le Pen's success will end at the second round in May dissuaded investors from panicking about any impact the shooting of a policeman in Paris could have on the first round of voting on Sunday," said Jasper Lawler, Senior Market Analyst at LCG.

Currency markets avoided major swings. Analyst Kathy Lien of BK Asset Management said a victory by centrist Emmanuel Macron would be the most bullish outcome for the euro.

"Throughout this past week, the euro traded as if Macron was a sure win but this is a big mistake because even the polls show that the market is underestimating the possibility of a strong victory by Le Pen," Lien said.

"As it is extremely difficult to predict the outcome of the election, the best way to trade the French Presidential election is to wait until the results are known. If the outcome is meaningful enough, which means it creates enough fear or relief, the impact on the euro will last for not only a few minutes but for days."