FRENCH stocks fell on Monday (Jun 10) after President Emmanuel Macron dissolved the country’s lower house of parliament and called new legislative elections following a drubbing for his group in European voting on Sunday.
BNP Paribas and Societe Generale tumbled more than 5 per cent.
The move weighed on broader markets, with the Stoxx 600 Index 0.7 per cent lower as of at 9.10 am in Paris, with most of the sectors in negative territory.
The CAC 40 Index fell as much as 2.4 per cent in early trading, the most in almost a year. Apart from banking stocks, French construction and materials sectors also declined sharply.
The political chaos fuelled worries across the continent, with the euro slipping to its lowest in a month.
“The surprise decision to call for snap elections adds to uncertainty, particularly as France could face an EU procedure for excessive deficits later on this month,” said Vincent Juvyns, global market strategist at JPMorgan Asset Management.
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Deepening political angst in Europe is likely to add fresh pressure on the euro after parliamentary votes saw leaders in France and Germany suffer losses, according to strategists.
“Already this morning one can see the euro trading lower, but I expect the spread between France’s sovereign debt and Germany to grow further,” added Juvyns. BLOOMBERG
