The Paris stock market fell yesterday 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.
London’s FTSE 100 dropped 0.1% to 7,114.55 points, Frankfurt’s DAX 30 climbed 0.2% to 12,048.57 points, Paris’ CAC 40 slipped 0.4% at 5,059.20 points and the EURO STOXX 50 was flat at 3,440.27 points at close.
Earlier, Asian markets built on Wall Street’s rally as geopolitical fears gave way to fresh hopes for Donald Trump’s stimulus after his top finance man said a US tax reform plan would be released “very soon”. Wall Street was a touch higher approaching midday in New York.
In Europe, a known terror suspect shot dead a French policeman and wounded two others on Thursday on Paris’s Champs Elysees in an attack claimed by the Islamic State group 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 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.
Global markets have taken a hit this month owing to concerns about US-Russia relations, tensions on the Korean peninsula and the president’s failure to push through a key healthcare bill.
But the risk-off mood lightened after Treasury Secretary Stevenmnuchin said the tax code overhaul promised by Trump was close.
The reforms, along with promises for big infrastructure spending, were a key driver of a global equity rally since the tycoon’s November election win.
The dollar, which has struggled in recent weeks against the haven yen, broke out of its malaise.
Adding to the dollar bounce were comments from a top Federal Reserve official saying he expected the central bank to hike interest rates three times this year.