European stocks decline due to political unrest in France

Following unexpected elections in which a hung parliament seemed likely, investors became concerned about the political unrest in France, which sent Europe’s stock markets down in their opening trades on Monday.

The Paris CAC 40 benchmark stocks index fell 0.4%, Frankfurt’s DAX dropped 0.1%, and the value of London’s FTSE 100 index fell by 0.3% within the eurozone.

In the meantime, the euro faltered in relation to the pound and dollar.

However, the Paris CAC 40 and Frankfurt’s DAX had both erased their losses and moved into positive territory after 30 minutes of trading.

In a vote called by President Emmanuel Macron three years ahead of schedule, the left was expected to emerge as the largest party in the new parliament of France, defeating a resurgent far right.

Macron’s centrist alliance will have dozens fewer members of parliament but held up better than anticipated and may finish in second place.

However, no party is anticipated to have won an absolute majority in the EU’s second-largest economy.

“Political uncertainty in France is set to remain elevated in the coming weeks until there is greater clarity over what form the next government will take,” noted MUFG economist Lee Hardman.

“With all three major parties falling well short of an absolute majority in parliament, it remains likely that the next government will struggle to implement their policy agenda.”

AFP