On Monday, the financial center in Paris was hit with a wave of nervousness and uncertainty following the victory of the National Rally in the European elections and Emmanuel Macron’s announcement of dissolving the National Assembly. The Paris Stock Exchange fell 1.88% in early trading, with similar declines affecting other European markets. In France, the CAC 40 index dropped by 150.75 points to 7,851.05 points.
The banking sector was hit the hardest by these uncertainties, with major companies like Société Générale, BNP Paribas, and Crédit Agricole experiencing significant declines in their stock prices. Companies that rely on concession contracts signed with the State, such as Eiffage, Vinci, and ADP also saw their stock prices fall. The rise of far-right parties in Europe also affected energy sector stocks, with companies like Nordex, RWE and SMA experiencing declines.
Analysts were skeptical about Emmanuel Macron’s decision to dissolve the National Assembly in hopes of clarifying the political situation in France. They believed it would be difficult for him to regain a majority. This uncertainty was reflected in currency market as euro fell sharply against dollar and investors showed less confidence in France’s ability to repay its debt as reflected rising interest rates on French bonds compared to Germany’s.
Overall investors are sending a clear signal to Paris indicating less confidence in France’s economic stability and future prospects due to downgrading of France’s rating by S&P Global Ratings , certain policy proposals from National Rally such as tax cuts and difference in interest rates between France and Germany has widened indicating growing perception of risk associated with investing
