French Markets Outperform as Macron Extends Lead

Eurozone stock markets are moving higher, with France outperforming as latest opinion polls show Macron extending his lead ahead of Sunday’s first round of the Presidential election, although given the unreliability of recent opinion polls, this remains a four-way race that could still go either way. For now, though pressure on France has receded and the CAC 40 is up 75%, against a decline in the DAX. Positive earnings reports from Unilever NV and Nestle SA helped to underpin a rally in food producers. The U.K.’s FTSE 100 continues to underperform and is down amid ongoing strength in Sterling. The improvement followed gains on most Asian markets overnight, although Japan’s Nikkei and Topix closed narrowly mixed amid a weaker Yen. U.S. stock futures are also moving higher and oil prices managed to move up from lows amid indications that output cuts could be extended.

WTI crude prices have found a footing after diving over 4% Wednesday in the wake of a larger than expected build in gasoline inventories. Prices are presently up 0.7% at $51.30, up on yesterday’s 16-day low at $50.09. The Saudi Arabian oil minister said that global oil stocks remain well above the five-year average, and, along with his Kuwaiti counterpart, signaled that the OPEC-led supply reduction would likely be extended into the second half of the year. This helped offset yesterday’s data showing a surge in petroleum inventories.

EU Construction Output Surged in February

Eurozone construction output surged 6.9% month over month in February, more than compensating for the -2.4% month over month contraction in the previous month and lifting the annual rate to 7.1% year over year, from -5.1% year over year at the start of the year. Varying weather conditions are partly to blame for the volatility in monthly numbers, but rising house prices and easy financing conditions are generally underpinning construction trends, even if conditions to vary largely across countries.

French bonds outperform as Macron extends lead. Election jitters ahead of Sunday’s poll have dominated market moves in France in recent weeks, and most recently seem to have underpinned the outperformance of French and Spanish bonds, as investors move into other peripherals, rather than German bonds, which remain pricey even if yields are up from recent lows. With recent opinion polls confirming that Macron is leading the field and still manages to gain support, while Le Pen seems stuck in second place now, there has been a bit of a reversal this morning, with French 10-year bonds outperforming.