(Finance) – Not even a month has passed since the European elections, that the markets of the Old Continent find themselves facing a new test for financial stability: the early elections in France. President Emmanuel Macron, precisely in consideration of the negative outcome of the vote in Europe, has in fact dissolved Parliament and called early elections which will be held on Sunday June 30 (first round) is Sunday July 7 (second round)). About 50 million French people are called to the polls to renew the National Assembly (parliament). But what impact are the elections having on the markets? And how will they move based on the outcome of the elections?
The vote on Sunday 30 June
Two days before the vote, i surveys they still seem to give Marine Le Pen’s National Rally party is on the movewith 36% of the vote, confirming the rise of the far right in France and a protest vote against President Macron.
The far-right front would largely surpass both the left-wing New Popular Front at 29% and the front supporting Macron indicated at 19.5% of the vote.
Nervous markets
Precisely in consideration of the‘Election outcome against current President Macron is causing a feeling of uncertainty on the financial markets, which are reacting with a certain nervousness in view of the elections, especially the Paris Stock Exchange.
The Cac-40 index This morning it started slightly lower, recording a decrease of 0.25%, despite the better performance of the rest of Europe. Even in week closes with a minus sign (-2.1%), while the performance of the last month marks a significant –7.6%.
Moody’s sees risks of rating downgrade
And, meanwhile, the rating agency Moody’s issued a warning: a prolonged period of post-election political instability could have “a negative impact” on the operating environment of French banks. In particular, the agency fears “a substantial decline and prolonged” of the value of French government bonds, the OATwhich would produce a soaring yields and spread. The other side of the coin of political instability.
But the agency anticipates that the elections could also worsen the French rating, putting fiscal consolidation at risk. Currently, Moody’s maintains an Aa2 rating on France, one step above those of S&P and Fitch, but the election outcome is “credit negative” and could lead to a cut in the outlook from stable to negative and in the long run to a lowering of the credit rating of French credit.
“The potential political instability represents a credit risk – the agency stressed – given the difficult fiscal framework that the next government will inherit”.