The Paris Stock Exchange has recently experienced a downturn, being the worst in Europe. This decline is due to the aftermath of the European elections, which caused a political earthquake in France. Following the victory of Marine Le Pen’s far-right party, President Emmanuel Macron decided to dissolve the National Assembly and call for an early vote.
In the polls, the Rassemblement National list, led by Jordan Bardella, secured the top position with 32% of the votes, while President Macron’s Renaissance party only received about 14.5%. As a result of these events, the French reference index Cac 40 dropped more than 2% to 7,837.38 points at mid-session.
This decline came after a 0.48% decrease on Friday, which was influenced by stronger-than-expected US employment data that dispelled the possibility of a Federal Reserve rate cut. The banking sector was particularly hard hit by the uncertainties in the market, with companies like Société Générale, BNP Paribas, and Crédit Agricole experiencing significant losses.
Additionally, companies that rely on government concession contracts saw declines in their stock prices. Eiffage dropped by 5.76% to 93.90 euros, Vinci fell by 3.88% to 106.45 euros, and ADP, the manager of Parisian airports, saw a 4.29% decrease to 122.60 euros. The overall economic climate in France is currently marked by instability and apprehension among investors.
The uncertainty and apprehension among investors are not limited to France alone as global markets have been affected as well due to trade tensions between China and United States and other geopolitical issues.
Overall it seems that political instability can have a significant impact on financial markets causing volatility and uncertainty among investors leading them to withdraw from certain investments or move their funds elsewhere until things stabilize again.
