Positive economic news coupled with growing expectations that centrist Emmanuel Macron will be the next French president gave European stock markets a lift Thursday, a day after the Federal Reserve’s latest assessment of the U.S. economy reinforced expectations for more interest rate increases later this year.
KEEPING SCORE: In Europe, the CAC 40 in France was up 0.9 percent at 5,350 while Germany’s DAX rose 0.9 percent to 12,642. The FTSE 100 index of leading British shares was 0.4 percent higher at 7,265. U.S. stocks were poised for a solid opening with Dow futures and the broader S&P 500 futures up 0.3 percent.
FRANCE FOCUS: Markets appear increasingly confident that Macron will emerge victorious in Sunday’s election against the far-right’s Marine Le Pen. Macron is perceived to be more business-friendly and is an advocate of France’s continued use of the euro and membership of the European Union. Snap polls after the pair’s debate on Wednesday had Macron as the clear winner and solidifying his position as the front-runner.
ANALYST TAKE: “Macron was considered to have outperformed Marine Le Pen in the final presidential debate,” said Kathleen Brooks, research director at City Index. “This has helped to boost equity markets in Europe.”
EUROPE DATA STRONG: European markets were further buoyed by a survey from financial information company IHS Markit showing the eurozone, and France in particular, picking up momentum at the start of the second quarter. The survey from IHS Markit was particularly encouraging. The firm said its purchasing managers’ composite output index — a broad gauge of economic activity — rose to 56.8 points in April from 56.4 the previous month. The reading was at its highest level since April 2011 and a tad ahead of the earlier estimate. Anything above 50 indicates expansion.
FED IN FOCUS: U.S. interest rates remained unchanged after the latest policy meeting by the Federal Reserve, which also said it expects the U.S. economy, the world’s biggest, to start growing faster. The Fed’s remarks provided further support for another Fed interest rate rise, widely expected for June. The U.S. central bank has signaled it plans to continue gradually raising interest rates that have been at ultra-low levels for years, gently removing the stimulus that has helped fuel an extended stock rally.
ASIAN SCORECARD: South Korea’s Kospi added 1 percent to end at 2,241.24 but other major regional benchmarks fell, with Hong Kong’s Hang Seng edging 0.1 percent lower to 24,683.88 and the Shanghai Composite on mainland China dipping 0.3 percent to 3,127.37. Australia’s S&P/ASX 200 fell 0.3 percent to 5,876.40. Singapore’s benchmark fell but indexes in other Southeast Asian countries and Taiwan rose. Japan’s market remained closed for a holiday.
CURRENCIES: The euro was up 0.4 percent at $1.0928, while the dollar rose 0.1 percent to 112.90 yen.
ENERGY: U.S. benchmark crude futures shed 56 cents to $47.25 a barrel in electronic trading on the New York Mercantile Exchange while Brent crude, used to price international oils, fell 56 cents to $50.23 a barrel in London.