Zoe Mckey, Staff Writer
French stocks and the euro surged on Monday after the first round of elections indicated a significant setback for President Emmanuel Macron, with the far-right National Rally leading, but likely not securing an outright parliamentary majority. The CAC 40 index, representing major companies in Paris, opened with a 2.7% rise and ended the day 1% higher, though still 6% below pre-election levels. Bank stocks, including BNP Paribas, Societe Generale, and Credit Agricole, recovered some losses, while the euro reached its highest level against the dollar in over two weeks. Yields on French government bonds remained stable after recent volatility, reflecting reduced investor fears of a financial crisis similar to the UK’s 2022 market crash.
Despite the setback for Macron, the immediate market reaction was one of relief, as investors had feared a far-right or far-left majority committed to high spending, exacerbating France’s debt and budget deficit. The National Rally secured 33.15% of the vote, followed by the left-wing New Popular Front with 27.99%, and Macron’s Ensemble alliance with 20.76%. Analysts warn of potential political gridlock or a coalition that could reverse some of Macron’s reforms, potentially slowing economic growth and increasing inflation. With the final round of voting on July 7, the election’s outcome remains uncertain, and the prospect of a divided parliament raises concerns about France’s ability to address its fiscal challenges.
