Europe Market Indexes Turns Lower Amid Political Uncertainty and Debt Worries

Bridgette Randall
09 Jul, 2024
London

European markets turned lower after investors reassessed the political landscape in the UK and France, and bond yields stayed near two-month highs. 

Benchmark indexes in London, Paris, and Frankfurt eased on the worry that the hung parliament in France may lead to political gridlock for several months. 

The centrist alliance led by President Emmanuel Macron, the recently formed Popular Front, and the National Rally Party formed three leading blocs, but neither group won a clear majority. 

Market participants are worried that if the political impasse drags on beyond a month, the CAC-40 index may decline between 5% and 20% from its current level, putting additional pressure on the euro. 

The euro held stable and the French bond yield hovered near a two-week high, but France is likely to go through several months of political instability before a new government is established. 

If parties fail to agree on a prime minister, President Macron may appoint a technocrat leader, avoiding a political impasse. 

On the economic front this week, France, Germany, and Spain are set to release their inflation updates.

 

Europe Indexes and Yields

The DAX index decreased by 0.4% to 18,391.69; the CAC-40 index fell by 0.9% to 7,561.27; and the FTSE 100 index declined by 0.3% to 8,171.46. 

The yield on 10-year German bonds edged lower to 2.54%. French bonds inched lower to 3.16%; the UK gilts inched lower to 4.16%; 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 89.82 Swiss cents.

Brent crude increased $0.22 to $85.42 a barrel, and the Dutch TTF natural gas fell by €0.45 to €31.70 per MWh.

 

Europe Stock Movers

Saint Gobain SA decreased 2.2% to €76.06, and the construction material maker said it has completed the acquisition of Australia-based building materials maker CSR for A$4.3 billion. 

CSR is saddled with at least $187 million of asbestos-related liabilities, as the company was a leading blue asbestos miner. 

Dassault Systems declined 4.5% to €33.75 after the engineering software company lowered its 2024 earnings outlook. 

PageGroup declined 5.7% to 398.37 pence after the UK-based recruitment company said fiscal year earnings in the current year are likely to drop as much as 50% from a year earlier. 

Indivior plunged 35% to 760.0 pence after the UK-based drug maker lowered its annual earnings outlook and said it was discontinuing production of Perseris, a schizophrenia drug. 

The drugmaker revised down its 2024 revenue outlook to between $1.15 billion and $1.22 billion from the earlier guidance range of between $1.24 billion and $1.33 billion.

The company lowered its adjusted operating profit range between $285 million and $320 million from the previous estimate of between $330 million and $380 million.