The Paris financial center was filled with nervousness, uncertainty, and worry on Monday following the victory of the National Rally in the European elections and Emmanuel Macron’s announcement of the dissolution of the National Assembly. The Paris Stock Exchange fell 1.88% in early trading, with other European markets experiencing similar declines. In France, the decline was much more pronounced, with the CAC 40 index falling significantly.
The banking sector was particularly hard hit by the uncertainties, with Société Générale, BNP Paribas, and Crédit Agricole all seeing significant drops in their stock prices. Companies with concession contracts signed with the State also experienced declines, including Eiffage, Vinci, and ADP. Additionally, European energy sector stocks were affected by the rise of the far-right in Europe.
Analysts are pessimistic about Macron’s chances of regaining a majority in the National Assembly, with many questioning the feasibility of him achieving this goal. The euro fell sharply against the dollar as uncertainty over the election results in France loomed. The bond market also saw an increase in interest rates for French loans, indicating a lack of confidence in France’s ability to repay its debt in the future.
Investors are expressing concerns about the National Rally’s program and its potential impact on public finances, as well as the recent downgrade of France’s rating by S&P Global Ratings. This has led to a significant increase in the difference in rates with Germany, signaling a lack of faith in France’s financial stability. The uncertainty surrounding the election results and the country’s economic future continues to weigh heavily on the markets.