News
Political uncertainty puts French financial markets under pressure
A screenshot shows French President Emmanuel Macron speaking during a televised address to the nation, during which he announced he was dissolving the National Assembly, the lower house of the French Parliament, and calling new general elections on June 30. Ludovic Marin/AFP/dpa
The call for early parliamentary elections in France continued to weigh heavily on the country’s financial markets on Tuesday.
Stock markets fell noticeably and the euro exchange rate also remained under pressure. Yields on French – but also Italian – government bonds have risen sharply.
On Sunday, French President Emmanuel Macron surprisingly announced early elections for the National Assembly. They will take place on June 30th and July 7th.
The reason for the announcement was the clear victory of the right-wing nationalist National Rally (RN) in the elections for the European Parliament. According to polls, the National Rally is also ahead in the parliamentary elections.
Left-wing parties in France intend to compete as an alliance in the elections, which also worsens the electoral prospects of Macron’s centrist bloc. Both right-wing and left-wing parties are making big spending promises to voters.
Ratings agency S&P Global Ratings, formerly Standard and Poor’s, recently downgraded France’s credit rating. On Tuesday, rating agency Moody’s stated that early elections would further compromise fiscal consolidation in France.
French government bond prices came under renewed pressure on Tuesday. In turn, the yield on 10-year government bonds rose to 3.32%, its highest level since November 2023. Yields also rose noticeably in Italy.
The French CAC 40 fell 1.22% to 7,798.5 points in early afternoon trading. The euro fell to $1.0724, its lowest level since early May.