In France, the stock market has been shaken by political uncertainties since Emmanuel Macron’s defeat in the European elections. The CAC 40 had its worst week in two years. It has fallen 6.23% since Monday.
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The flagship index of the Paris Stock Exchange had not experienced such a fall since Russia’s invasion of Ukraine at the end of February 2022. The CAC 40 has lost all the gains accumulated since January 1, 2024 and is even in decline of 0.53% over this period. The French index is the only one in Europe to be in negative territory in terms of its performance since the start of the year. In comparison, the Milan and Frankfurt Stock Exchanges gained more than 7%, while London gained more than 5%.
The financial markets hate uncertainty and the least we can say is that it has been very strong since the dissolution of the National Assembly announced by Emmanuel Macron, with the prospect of a victory for the National Rally.
On Friday, the presentation of the New Popular Front’s rupture program accentuated the decline, by 2.66% on the last day of trading to 7,503.27 points. According to stock market analysts, the stock market fears the tax aspect, the return of the wealth tax advocated by the left alliance, while the bond market, the French debt, suffers from the budgetary aspect of the programs of the left. New Popular Front, like the RN.
The gap between the interest rates on French and German ten-year bonds widened to 82 basis points, which in turn contributed to the fall in the stock market. According to Bloomberg, the amplification of this gap over the week is at this stage more significant since 2011, at the time of the debt crisis of the States of the euro zone.
The automotive sector affected by the issue of Chinese electric vehicles
The European automotive sector fell again on Friday, still suffering from the European Commission’s desire to impose from July 4 up to 38% additional customs duties on imports of Chinese electric vehicles into the EU, in a context where Beijing is accused of having illegally favored Chinese manufacturers. Renault shares fell 3% to 48.14 euros. Over the week, the value of this share lost 6.01%. Stellantis fell 4.39%, to 18.81 euros, and saw its weekly balance sheet fall by 6.83%.
Read alsoDissolution of the Assembly: the Paris Stock Exchange in decline, France’s borrowing rate on the rise