After his party lost a European Parliament vote to the far right, President Emmanuel Macron’s surprise emergency election on Monday shook French markets and the euro.
Significant far-right victories in the French election may force Macron to govern with a hostile parliament, making it harder for his centrist administration to implement its policy program and increasing questions about its financial management.
France’s CAC 40 index, which includes 40 of Paris’ largest companies, was down 1.8% at 11.02 a.m. ET, with banks worst off. Similarly, the European Stoxx 600 lost 0.5%.
Late afternoon trading saw the euro fall 0.6% versus the US dollar to its lowest level in a month. The 20-nation euro sank 0.6% against the British pound, marking its lowest level in over two years.
Macron dissolved the French parliament and ordered the election after a Sunday exit poll showed the far-right National Rally would defeat his Renaissance party in the European elections. The French election will have two rounds: June 30 and July 7.
French legislative elections elect 577 National Assembly members. Independents will elect the president in 2027.
He says Macron and his government have helped parts of the French economy. The economy, especially IT investment, is booming with record-low unemployment. Much of the stuff is doubtful.
Société Générale fell 8%, BNP Paribas 5.5%, and Credit Agricole 4.4% by late afternoon in Paris.
After French bank stock dips, Morningstar stocks analyst Johann Scholtz said investors were worried about the National Rally’s “interventionist economic policies.”
He said, “In many European jurisdictions, banks have become a soft target for populist measures such as windfall taxes, restrictions on dividends and share buybacks.” .
