Paris stock market falls after attack, before French elections

Paris: The Paris stock market fell on Friday after the latest violent attack in the city and as traders awaited the weekend presidential election in France.

London also dropped following 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.

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”.

In Europe, a known terror suspect shot dead a French policeman and wounded two others Thursday on Paris’s Champs Elysees in an attack claimed by the Islamic State group days before a presidential election.

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 was smothered after Treasury Secretary Steven Mnuchin 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 news was met with relief by Wall Street, with the Nasdaq leading a surge in all three main indices Thursday and hitting a new record high. The dollar, which has struggled in recent weeks against the haven yen, also broke out of its malaise before slipping back on Friday.

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.

“While we are no clearer on what this weekend’s French election result will be, we at least received hints from Treasury Secretary Mnuchin,” said Joshua Mahony, market analyst at IG trading group.

“The subsequent dollar and stock rally off the back of Mnuchi’s comments have largely paved the way for today’s trade.”

In Asia on Friday, Tokyo’s Nikkei closed up one percent as exporters were boosted by some weakness for the yen and comments from Bank of Japan Governor Haruhiko Kuroda that he would maintain a loose monetary policy, despite an improvement in the economy.

On foreign exchange markets, the euro suffered a brief dive against the dollar after the Paris attack.

Attention now turns to this weekend’s first-round presidential vote in France, with a four-way split leaving analysts unable to work out which two candidates are likely to win through a second phase.

While there are fears the far-right Marine Le Pen will qualify, observers believe the moderate Emmanuel Macron will beat her in next month’s run-off.

However, there is unease that a win for Le Pen could lead to France’s exit from the European Union and possible collapse of the bloc.