The CAC 40 held nearly flat in Paris on Monday afternoon as a 25% plunge in rail group Alstom offset support from falling oil prices. France's benchmark stock index edged up 0.12% to 7,978.73 points in early afternoon trading on November 2, according to BFM Bourse.
Investors in Paris took a cautious wait-and-see approach at the start of a week marked by United States midterm elections, financial results from Apple and Friday's American employment report.
The CAC 40 is the main stock market index on Euronext Paris and tracks 40 of the largest publicly traded companies in France by market capitalisation. On the foreign exchange market on Monday, the euro gained 0.5% against the United States dollar to trade at 1.1217 dollars.
Alstom and 2CRSi shares tumble on financial warnings
Among individual stocks in Paris, Alstom plunged 25% after the company issued another heavy profit warning. Headquartered in Saint-Ouen-sur-Seine near Paris, the French multinational manufacturer builds high-speed trains, metro cars, trams and signalling systems for rail networks around the world.
A profit warning is an official announcement by a publicly listed company telling investors that its upcoming earnings will fall short of previous guidance or analyst expectations.
French technology company 2CRSi also suffered a steep setback, falling 18% after auditing firm EY, formerly known as Ernst and Young, was unable to certify the company's accounts. Based in Strasbourg in the Alsace region of eastern France, 2CRSi designs and manufactures high-performance computer servers and data storage systems.
EY is one of the Big Four global accounting and professional services networks that audit publicly traded businesses. Under French corporate law, statutory auditors examine annual financial statements to verify that they present an accurate and fair view of a company's financial position.
Oil prices slide on Iran diplomacy reports
Broader market risk appetite was supported by a sharp decline in crude oil prices. The January futures contract for North Sea Brent crude fell 4.2% to 108.60 dollars a barrel, while the West Texas Intermediate contract traded in New York dropped 4.4% to 99.58 dollars a barrel.
The drop in crude oil prices followed press reports stating that Donald Trump would favour diplomatic efforts rather than military strikes against Iran after the United States midterm elections.
Brent crude extracted from the North Sea serves as the international pricing benchmark for roughly two-thirds of the world's traded oil supplies. West Texas Intermediate, or WTI, is the primary benchmark for crude oil produced in the United States. Lower oil prices reduce energy and transport costs for businesses and consumers.
US midterm elections and key data ahead
Investors are awaiting the United States midterm elections, which will take place on the night of Tuesday to Wednesday. Analysts at Deutsche Bank, a German multinational investment bank based in Frankfurt, said that polling indicates the Democrats are well placed to win the three seats needed for a majority in the House of Representatives.
Deutsche Bank noted that the race for the United States Senate remains much closer and that the final outcome in either chamber could take several days to become clear if the margins are narrow. Midterm elections are held halfway through a four-year presidential term to contest seats in both chambers of Congress.
Seth Meyer at global asset management firm Janus Henderson said that a probable return to divided power within the federal government could lead to a short-term impasse, which is not necessarily an unfavourable situation for financial markets.
Market attention this week also centres on two major economic and corporate events in the United States. Technology company Apple is scheduled to release its earnings results on Monday evening, while the monthly American employment report will be published on Friday.
