Global equities edge higher as French election looms; euro up

Oil prices claw back some losses; gold steady

LONDON, April 20, (Agencies): World stocks eked out small gains in choppy trading on Thursday as investors resisted risky bets ahead of the first round of the French presidential election over the weekend.

Oil prices, which fell sharply on Wednesday on supply news, regained some of their losses.

In general, markets cautiously stuck to well-worn trading ranges buffeted by concern over political risks and continued tensions over North Korea.

Stock futures on Wall Street rose 0.3 percent.

MSCI’s world stock index was up 0.1 percent.

The FTSE 100, which has slid into negative territory for the year, fell 0.2 percent.

The lack of conviction among market participants spurred some traders to shut down broad bets against the euro and other proxies for election risks such as shares of French banks.

The euro rose 0.4 percent to $1.0751 while France’s blue-chip CAC 40 rose as much as 1 percent, led by gains in BNP Paribas and Societe Generale.

“Squaring up may be a factor,” said BMO strategist Stephen Gallo, noting that markets were still broadly short the euro and cutting back on risk would mean to take those positions off too.

Others warned against reading too much into Thursday’s moves.

Choppy trading in the run-up to the French elections comes as a run of disappointing US economic data and questions about whether the Trump administration can push through tax cuts have dented some of the enthusiasm for risky assets in recent weeks.

A sharp dip to three-week lows in oil prices overnight was the latest sign of an unwind in the global reflation trade. Crude oil clawed back some of the loss but concerns about a supply glut capped the rebound.

Brent crude futures were up 0.5 percent to $53.22 a barrel after sliding more than 3 percent in the previous session. US West Texas Intermediate crude futures were up 0.4 percent.

US

US stocks were higher in early afternoon trading on Thursday, with gains in American Express keeping the Dow Jones Industrial Average largely on track to snap a two-day losing streak.

The credit card company was up 5.5 percent after reporting a smaller-thanexpected drop in quarterly profit on Wednesday.

Apple rose 1.5 percent after Morgan Stanley and Stifel raised their price targets on the stock, helping lift both the S&P 500 and the Nasdaq.

With Wall Street near record levels and worries over President Donald Trump’s ability to deliver on his progrowth promises, investors are hoping first-quarter earnings will be strong enough to justify lofty market valuations.

Of the 82 companies in the S&P 500 that have reported earnings through Thursday afternoon, about 75 percent have topped expectations, according to Thomson Reuters data, above the 71 percent average for the past four quarters.

Overall, profits of S&P 500 companies are estimated to have risen 11.1 percent in the quarter, the best since 2011.

However, mounting tensions between North Korea and the United States and the looming French presidential elections continued to weigh on investors’ minds.

A closely watched poll showed Centrist Emmanuel Macron hung on to his lead as favorite to win France’s presidential election in a four-way race that is too close to call.

Oil prices were little changed in a seesaw trading session, as investors weighed rising US production against comments from leading Gulf oil producers that an extension to OPEC-led supply cuts was likely.

Oil majors Chevron and Exxon were up about 1.3 percent.

At 12:36 p.m. ET (1636 GMT) the Dow Jones Industrial Average was up 164.63 points, or 0.81 percent, at 20,569.12 and the S&P 500 was up 16.66 points, or 0.71 percent, at 2,354.83. The Nasdaq Composite was up 50.18 points, or 0.86 percent, at 5,913.21.

Europe

European shares edged higher on Thursday as investors welcomed results from Man Group and Pandora maintained its outlook, while French equities outperformed ahead of the first round of France’s presidential election.

The pan-European STOXX 600 index ended the session 0.2 percent higher.

France’s CAC 40 outperformed peers, jumping 1.5 percent and marking its best day since the beginning of March.

Banking stocks, which are regarded as bellwethers for the economy, led the CAC 40 higher, with BNP Paribas and Societe Generale up 4 and 2.8 percent respectively. Some analysts suggested that investors were closing out short positions ahead of the vote.

More broadly, European banks also rose, up 0.8 percent. UBS on Wednesday upgraded the sector to ‘neutral’ from ‘underweight’, citing rising reflation expectations and a seemingly more benign regulatory environment.

Even the struggling UK FTSE 100 managed to post a 0.1 percent gain, despite coming under pressure this week after British Prime Minister Theresa May called a snap general election, a move that sent sterling to a more than 6-month high.

Earnings-related newsflow drove the top gainers, with Pandora up 5 percent, regaining ground after a broker downgrade hit it earlier in the week. The company updated its financial reporting structure, confirming its 2017 outlook.

Asia

Asian markets mostly rose Thursday following broad losses the previous two days but they struggled to maintain early momentum as analysts warned caution was prevailing on geopolitical worries and fading hopes for Donald Trump’s stimulus drive.

Energy firms were among the main laggards, tracking losses in their US counterparts, after a surprise jump in US petroleum inventories sent oil prices skidding almost four percent Wednesday.

Hong Kong added one percent, Sydney put on 0.3 percent by the close, Seoul jumped 0.5 percent and Singapore firmed 0.1 percent.

But Tokyo ended marginally lower, while Shanghai was also flat. Wellington and Taipei slipped.

CNOOC fell 0.4 percent in Hong Kong, while Sydney-listed Woodside Petroleum lost 1.2 percent and Inpex sank 1.3 percent in Tokyo.

China stocks snapped a four-day losing streak on Thursday, with investors continuing to seek cover in defensives such as the consumer and healthcare sectors, while fleeing small caps and stocks related to the new Xiongan economic zone.

The blue-chip CSI300 index rose 0.5 percent to 3,461.55 points, while the Shanghai Composite Index edged up 0.1 percent to 3,172.10.

Zhangtai Securities warned in its latest strategy report that stocks will remain volatile amid an increasingly tighter regulatory and monetary policy environment.

Chinese shares have also been pressured by worries that economic and corporate profit growth will soon start to fade after a strong start to the year. But investors drew some solace from Beijing’s pledge late on Wednesday to step up policy support if there is a jump in the jobless rate.

Underscoring reduced risk appetite, investors rushed into sectors that promise stable returns and generous dividend payouts, pushing both consumer and healthcare indexes up over 2 percent, while an index tracking liquor makers jumped 3.3 percent.

Oil

Oil prices were largely flat on Thursday after steep losses the previous session, with rising US production weighing against comments from leading Gulf oil producers that an extension to OPEC-led supply cuts was likely.

Brent futures were at $52.93 barrel at 1345 GMT, unchanged from their last close. US crude futures were down 9 cents at $50.50 a barrel.

Both benchmarks had traded more than 50 cents higher earlier in the day, but gains eased at the start of US trading hours.

“The US market perhaps doesn’t believe in the oil market balance that OPEC would have us believe,” said Hans van Cleef, senior energy economist with ABN AMRO.

OPEC members Saudi Arabia and Kuwait signalled that an effort by the Organization of the Petroleum Exporting Countries and other producers, including Russia, to cut oil output was likely to be extended beyond June.

But bloated inventories weighed. Despite a drop in US crude stocks last week, an unexpected 1.5-millionbarrel build in gasoline stocks drove prices more than 3.5 percent lower on Wednesday.

US crude oil production rose to 9.25 million barrels per day, official data showed, up almost 10 percent since mid-2016 .

Gold

Gold steadied on Thursday after its biggest one-day drop in more than six weeks, with a retreat in the dollar arresting the slide, though moves were muted as markets await the outcome of the looming French presidential election.

Polls ahead of the French vote, which begins this weekend, give both far-right and far-left candidates a chance of making it into next month’s run-off, though centrist candidate Emmanuel Macron is shown in the lead.

Spot gold was at $1,279.56 an ounce by 1330 GMT, little changed from $1,278.91 late on Wednesday. The metal hit a five-month high of $1,295.42 on Monday before pulling back.

US gold futures for June delivery were down $1.90 an ounce at $1,281.50.

“Even though momentum has been positive there are other factors preventing a quick move higher from here – the sentiment is still that there will be stronger data from the US, and yields will probably rise. That will likely limit the upside (for gold),” said ABN Amro analyst Georgette Boele.

Improving appetite for equities, which edged higher in Europe and the United States, was also undermining demand for gold as a haven from risk, she added.

The dollar index held to earlier losses on Thursday as the latest data on domestic jobless claims and business activity in the Mid-Atlantic region failed to change traders’ expectations of modest US economic growth and low inflation.

Holdings of the world’s largest goldbacked exchange-traded fund, New York-listed SPDR Gold Shares , rose 11.8 tonnes on Wednesday for their biggest one-day inflow since September, data from the fund showed.

However, spot prices fell 0.8 percent on Wednesday, their biggest one-day drop since March 7, after last week’s rally failed to beat resistance created by a declining trendline from the 2011 record high. Prices are so far on track to fall this week after five straight weeks of gains.