French and UK Stocks Outshine European Peers Ahead of Elections
(Bloomberg) -- French stocks outperformed on Thursday, boosting the broader market, as polls showed Marine Le Pen’s National Rally and its allies would fall well short of an absolute majority in Sunday’s French parliamentary election.
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The CAC 40 Index rose 0.8% by the close as Ifop said the far-right group was on course to win between 210 and 240 of the 577 seats in the National Assembly, meaning it would lack the 289 lawmakers needed to pass bills easily and push through its agenda. Morgan Stanley strategists, meanwhile, advised buying French stocks, predicting the market to recover after the election.
The pan-European Stoxx 600 Index gained 0.6%, with banks and energy stocks outperforming. The retail sector underperformed.
The UK’s FTSE 100 was up 0.9%, with the Labour Party seen winning elections by a landslide.
“UK elections should really be a non-issue for markets as, unless there’s a big surprise, it is already priced in,” said Diego Fernandez, chief investment officer at A&G Banco. “In France, markets seem to be quite complacent this week, but we will be ready to buy in any weakness should Sunday’s results bring more declines.”
The gains also follow a strong close in US markets that drove the S&P 500 and Nasdaq 100 to fresh records on Wednesday. The US stock market is closed Thursday for Independence Day.
Investors will now closely watch Friday’s US jobs report, with economists anticipating a 190,000 gain in June non-farm payrolls, less than the previous month, potentially allowing the Fed to cut rates in September.
In the UK, voting ends at 10 p.m. and the BBC, Sky and ITV will release the official Ipsos exit poll.
The vote outcome is “marginally positive as tighter ties with Europe will be beneficial to domestic consumption,” said Gilles Guibout, a Paris-based portfolio manager at Axa IM. “It may also open, although very gradually, more opportunities for some stock pickers wanting to diversify in terms of country.”
Among single stock movers, Continental AG jumped as the German auto supplier expects slight growth in car production worldwide in the second quarter. Roche shares slipped after the pharma giant’s antibody drug tiragolumab failed to meet the main goal in a clinical trial in lung cancer patients.
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--With assistance from Julien Ponthus, Michael Msika, Farah Elbahrawy and Sagarika Jaisinghani.
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