07:29 AM
President Emmanuel Macron’s decision to call early elections shook the French financial markets yesterday. This was revealed by a Bloomberg report.
Investors, already concerned about the country’s fiscal problems, found in this measure a new reason to get rid of French securities. As a result, Stocks fell sharply, with banks leading the losses, and the euro plummeted to its lowest level in a monthreads the note from this specialized media.
Read also: “Colombian-style” energy transition, the ACP reveals details
Uncertainty over France’s political future has added to concerns about the country’s growing debt burden., which last month already caused a credit rating downgrade by S&P Global Ratings. The pan-European Stoxx 600 stock index also suffered, falling as much as 0.9%. French 10-year bonds saw their yields rise, reaching the highest level since November.
International agencies such as AFP and EFE reported that The Paris Stock Exchange had a difficult day on Monday due to political uncertainty due to early legislative elections, where the extreme right could come to power. The general index fell 1.35%.
At that moment, The CAC-40 index fell more than 2%, reflecting investor fear over President Emmanuel Macron’s decision to dissolve the National Assembly after losing in the European elections on Sunday.
It must be remembered that, in those elections, Marine Le Pen’s party, National Rally, obtained 31.4% of the votes, more than double that of Macron’s party, Renaissance, which only obtained 14.6%. Furthermore, the Reconquista party, even more extreme than Le Pen’s, obtained 5.5% of the votes.
You may be interested in: Inclusive and diverse companies, 25% more likely to excel
According to these agencies, investor concern was reflected in the increase in the French risk premium. The sectors most affected by uncertainty were banks and dealerships.
“Investors do not share Macron’s risk appetite”Stefan Koopman, senior macroeconomic strategist at Rabobank, told Bloomberg. And he added: “His courage is undeniable, but it seems like doubling down after a bad performance.”
For example, The Paris CAC 40 stock index fell by up to 2.4%, and shares of major French banks lost up to 9%. Mohit Kumar, chief economist at Jefferies, told Bloomberg that “a right-wing majority in Parliament would hamper any reform plan, further raising market concerns.”
For his part, Vincent Mortier, investment director of Amundi, told this medium that Markets will maintain a cautious attitude in the near future. “French stocks will likely underperform their European peers and the spread between French and German sovereign debt yields could widen modestly.”
Bloomberg concluded that The market reaction reflects deep concern about France’s political and economic stability, with investors looking for signs of stability amid uncertainty. ““The situation will continue to be closely monitored as the country prepares for the elections.”
Read also: May inflation will surprise Colombia, analysts estimate, what is it about?
