European stock markets slump on elections fever

European-stock-marketLONDON: European stock markets slid Tuesday with political uncertainty dominating as Britain called a snap general election and France’s presidential race tightened.

Indices were hit also by falling metals prices, traders said, as investors returned to their desks after the Easter break.

Around 1030 GMT, the main indices in London and Paris were each down around 1.5 percent.

British Prime Minister Theresa May on Tuesday called for an early general election on June 8 in a surprise announcement as Britain prepares for delicate negotiations on leaving the European Union.

“May has surprised markets,” said David Cheetham, chief market analyst at XTB trading group.

“The pound has recovered from some earlier jitters when news of a statement from the PM sent sterling falling… Since the election was confirmed sterling has moved off its lows.”

All eyes were also on France less than a week before the country’s presidential election.

“The French Presidential elections will dominate a week that also includes the first busy week of US earnings season,” said a note from Deutsche Bank.

“Market-friendly candidate (Emmanuel) Macron remains well ahead… but obviously there’ll be some concern with the first round getting tighter that he’ll fail to be in that run-off.”

After weeks of twists and turns, the unpredictable race has narrowed dramatically, with surveys suggesting four candidates are in contention to win one of the top two spots in the vote next Sunday and progress to the run-off a fortnight later.

Scandal-hit conservative Francois Fillon and radical leftist Jean-Luc Melenchon are steaming up behind the two frontrunners — Macron and French far-right leader Marine Le Pen.

In Asia on Tuesday, Japanese shares won a boost from a weaker yen but some other key Asian markets drifted lower on geopolitical concerns, with lower iron ore prices dragging on mining stocks in Sydney.

US Vice President Mike Pence reiterated his country’s commitment to the security of Japan on a visit to Tokyo on Tuesday, as North Korea vowed to launch missile tests “every week” — ramping up fears over its weapons programme.

In an interview with the BBC, the nuclear-armed North also threatened “all-out war” if the US took any action against it.

“One suspects the concerns in North Korea have further to play out,” said IG market strategist Chris Weston, citing worries of further missile testing in the near term.

Hong Kong was down more than one percent after a two-day holiday, while Shanghai closed down 0.8 percent despite positive Chinese GDP growth data released Monday.