European Bond Yields In Focus Ahead of Elections in France and the UK

Bridgette Randall
26 Jun, 2024
Frankfurt

European markets jumped higher amid election jitters, rate uncertainty, and a weak economic outlook. 

Benchmark indexes in Paris, London, and Frankfurt advanced despite the growing anxieties about the upcoming elections over the next week. 

Investors are bracing for a shift in the balance of power in France, as the party controlled by President Emmanuel Macron is likely to suffer significant losses. 

The shift in power in the legislative assembly is also likely to slow down economic reforms and delay France's goal of lowering its budget deficit below 5% of GDP by 2027. 

France's national debt is already hovering above 110% of GDP, one of the highest deficits in the world, and above the European Union average of 88.6%. 

In the UK, the Conservative Party is likely to suffer severe losses in the upcoming parliamentary election scheduled for July 4. 

The next government in the UK is also facing a severe jump in national debt after Prime Minister Rishi Sunak's government ramped up spending during the pandemic era, lifting the debt to 101.3% of GDP.

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 18,238.42; the CAC-40 index fell by 0.3% to 7,639.42; and the FTSE 100 index rose by 0.1% to 8,259.77. 

The yield on 10-year German bonds edged higher to 2.43%. French bonds inched lower to 3.13%; the UK gilts edged higher to 4.10%; and Italian bonds increased to 3.92%.

The euro edged lower to $1.088; the British pound inched higher to $1.266; and the U.S. dollar advanced to 89.80 Swiss cents.

Brent crude decreased $0.57 to $85.43 a barrel, and the Dutch TTF natural gas rose by €0.58 to €35.10 per MWh.

 

Europe Stock Movers

Gelion PLC surged 51% to 28.0 pence after the Anglo-Australian battery company struck a joint development agreement with Glencore International AG. 

Volkswagen AG declined 2.7% to €103.65, and the German vehicle maker announced a $5 billion investment in a joint venture with the struggling electric vehicle maker Rivian. 

Checkit plc declined 3.3% to 22.25 pence after the automated monitoring system developer decided not to make an offer to acquire Crimson Tide. 

Deliveroo jumped 2.7% to 130.90 pence on reports suggesting that the U.S.-based delivery company DoorDash may be interested in acquiring the company. 

Energy explorers turned lower following the more than expected increase in U.S. inventories. 

Shell PLC decreased 0.4% to 2,796.0 pence, and BP plc declined 0.4% to 473.65 pence.