France Faces Political Gridlock After Left Alliance Wins Big But Lacks Majority

Bridgette Randall
08 Jul, 2024
London

European markets advanced despite France heading for months of political gridlock after neither party came close to winning a majority seat to form a government after the second phase of the snap election this Sunday. 

The recently formed alliance of left-leaning parties, the New Popular Front, won the largest bloc of seats, winning 182 seats in France's 577-member parliament. 

President Emmanuel Macron's coalition, Ensemble, the centrist alliance, won the second largest bloc with 163 seats, followed by the far-right National Rally Party with 143 seats. 

Any governing party needs at least 289 seats to form the next government. 

France is in uncharted territory as the country has always had a dominant party to form the government, avoiding the need for coalitions among leading parties with different views. 

 

German Exports and Trade Surplus Expanded In May

On the economic front, Germany's exports declined for the first time in three months in May, data from the Federal Statistical Office, Destatis, showed on Monday. 

Exports declined 3.6% from the previous month to €131.6 billion, and imports fell 6.6% to €106.7 billion, resulting in a trade surplus of €24.9 billion. 

The trade surplus in May jumped to €24.9 billion from €19 billion a year ago. 

Exports to the member states of the European Union decreased by 2.5% to €72.3 billion, and imports from the region fell by 8.9% to €55.7 billion. 

Exports to the U.S., the largest market for German goods, declined 2.9% to €13.8 billion, and to the People's Republic of China, they decreased 10.2% to €7.6 billion. 

Imports from the People's Republic of China, the largest source of imports, rose 1.7% to €13.0 billion, followed by imports from the United States worth 7.9 billion, an increase of 4.6%. 

 

Europe Indexes and Yields

The DAX index increased by 0.4% to 18,540.62; the CAC-40 index rose by 0.2% to 7,692.54; and the FTSE 100 index rose by 0.2% to 8,219.48. 

The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.15%; the UK gilts inched lower to 4.13%; and Italian bonds decreased to 3.92%.

The euro edged lower to $1.08; the British pound inched higher to $1.28; and the U.S. dollar weakened to 89.62 Swiss cents.

Brent crude increased $1.07 to $85.90 a barrel, and the Dutch TTF natural gas fell by €0.41 to €33.43 per MWh.

 

Europe Stock Movers

The French banks rallied after the far-right National Rally Party failed to win a majority in the second round of the snap election on Sunday. 

Credit Agricole, Societe Generale, and BNP Paribas advanced between 1% and 2%. 

Britvic Plc increased 4.6% to 1,265.0 pence after the Danish brewer agreed to acquire the British soft drink maker for £3.3 billion. 

Carlsberg jumped 4.4% to DKK 873.20. 

Marston's PLC jumped 15% to 35.29 pence after the pub and hotel group agreed to sell its 40% stake in the brewing joint venture with Carlsberg. 

HgCapital Trust increased by 0.1% to 485.62 pence after the private equity company sold its remaining stake in the business software company TeamSystem. 

Delivery Hero decreased 5.2% to €19.93 after the German food delivery company said it may face a fine of more than €400 million from the European Union for violating antitrust rules.