Euro In Focus as Sharp Divisions Keep French Parties From Forming the Next Government

Bridgette Randall
11 Jul, 2024
London

European markets advanced for the second day in a row after falling in three previous sessions as investors attempted to look beyond the brewing political crisis in France. 

Benchmark indexes in Paris, London, and Frankfurt edged up more than 0.3%, and France's political turmoil shows no sign of easing. 

President Emmanuel Macron's Renaissance party appears to be heading for a division, and the newly formed Popular Front is heading for infighting as lawmakers haggle to agree on a new government. 

Moreover, President Macron's letter published in regional newspapers reiterated that "no one" won the snap election and urged parties to form a "broad" coalition, confirming sharp divisions among members of parliament. 

France's hung parliament has forced parties of various ideologies to set aside their differences to form a coalition government. 

The Centrist-Renaissance party and its Ensemble bloc (168 seats) are likely to form an alliance with Les Republicains (66 seats), and five independent candidates, totaling 239, could form a minority government in France's 577-member parliament. 

French political turmoil is likely to worsen in the weeks ahead as the nation prepares for the Summer Olympics, but the ongoing political crisis also stokes fears of France weakening its influence in the European Union. 

On the economic front, Germany's consumer price inflation was confirmed at 2.2% in June, following a 3-month high of 2.4% in May, the Federal Statistical Office, or Destatis, confirmed Thursday. 

Real GDP in the UK edged up 0.4% in May after showing no growth in April, the Office for National Statistics reported Thursday. 

 

Europe Indexes and Yields

The DAX index increased by 0.3% to 18,452.74; the CAC-40 index rose by 0.4% to 7,607.24; and the FTSE 100 index rose by 0.2% to 8,211.63. 

The yield on 10-year German bonds edged higher to 2.54%. French bonds inched higher to 3.20%; the UK gilts inched higher to 4.16%; and Italian bonds increased to 3.86%.

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 $85.29 a barrel, and the Dutch TTF natural gas rose by €0.58 to €31.24 per MWh.

 

Europe Stock Movers

Hugo Boss increased 1.4% to €39.92, and Frasers Group increased its stake in the fashion company. 

Suedzucker AG fell 6.3% to €12.81 after the sugar producer reported a first-quarter profit decline of 45% from a year earlier. 

Fielmann Group AG increased 3.3% to €43.05 after the German eyewear company reported positive first-half results and estimated an improved operating earnings margin in 2024 and 2025. 

Severn Trent rose 4.2% to 2,727.0 pence after the water management and distribution company said its financial performance is in line with management expectations. 

The company also confirmed its capital investment plan for the current year to range between £1.3 billion and £1.5 billion. 

John Wood Group decreased 0.9% to 205.20 pence after the oil service company reported a 6% decline in the first half ending in June.