European Markets Halted a two-day Selloff, French Politics In Uncharted Territory

Bridgette Randall
12 Jun, 2024
Frankfurt

European stock market indexes and bonds in the eurozone rebounded after two days of losses following France's surprise election announcement. 

The euro held firm for the second day in active trading as investors still assessed the impact of French President Macron's surprise announcement of the parliamentary election. 

The risky move threw French politics into turmoil and raised the prospect of the opposition winning control of the parliament, causing legislative gridlock and slowing down progress in lowering the government's debt. 

The results of the European Union election on Sunday showed the far-right political parties winning more seats, but the three leading blocs—the EPP, Renew Europe, and S&D—retained majority control after winning 407 of the 720 seats. 

However, the shift to the right led to political upheaval in France, Germany, Austria, and Belgium. 

French President Emmanuel Macron dissolved the parliament after the far-right National Rally Party garnered 31.5% of votes, more than 15.2% won by Macron's Renaissance party. 

On the economic front, Germany's inflation rose for the first time in five months, as initially estimated, Destatis confirmed Wednesday. 

Consumer price inflation in May accelerated to 2.4% from a stable 2.2% in April, which was the lowest level in three years. 

 

Europe Indexes and Yields

The DAX index increased by 0.6% to 18,471.95; the CAC-40 index rose by 0.4% to 7,818.58; and the FTSE 100 index advanced by 0.6% to 8,196.35. 

The yield on 10-year German bonds edged lower to 2.60%. French bonds inched lower to 3.20%; the UK gilts edged lower to 4.25%; and Italian bonds decreased to 4.03%.

The euro edged higher to $1.075; the British pound inched higher to $1.275; and the U.S. dollar weakened to 89.58 Swiss cents.

Brent crude decreased $0.77 to $81.68 a barrel, and the Dutch TTF natural gas rose by €1.08 to €35.22 per MWh.

 

Europe Stock Movers

French banks rebounded after two days of selloffs, and bond yields recovered. 

Societe Generale gained 0.9% to €23.08, Credit Agricole rose 2.4% to €13.90, and BNP Paribas advanced 1.7% to €61.79. 

Legal & General declined 5% to 230.89 pence after the newly appointed chief executive launched a restructuring plan to focus on three core units. 

Rentokil Initial plc soared 12.3% to 466.40 pence after activist investor Trian Fund Management acquired a substantial stake in the company. 

Skanska AB jumped 0.7% to SEK 186.90 after the Swedish construction company sold its multi-family rental business in Denmark to NREP for about 737 million Danish kroner, or 1.1 billion Swedish kronor. 

Landore Resource surged 33% to 3.80 pence after the gold mining company secured £3.7 million to expand its gold project in Northwestern Ontario, Canada. 

The BAM Gold Project, an early-stage development project, is estimated to have at least one million ounces of gold deposits. 

The company sold 153.47 million shares at a price of 2.40 pence per share in a two-tranche offering to investors, representing 49.56% of the enlarged share capital.