France's Public Debt Reaches New High, Stocks in Paris and London Advance

Bridgette Randall
24 Dec, 2024
London

Stocks lacked direction, and investors stayed away in a holiday-shortened week amid persistent political uncertainties and a weakening economic backdrop in the Eurozone. 

Benchmark indexes in Paris and London gained 0.6% as financial markets closed earlier, and markets in Frankfurt and Milan remained on Christmas Eve. 

Financial markets in Paris, Milan, London, Frankfurt, and Madrid will remain closed on Wednesday and Thursday to celebrate Christmas. 

France's public debt increased to €3.3 trillion at the end of the third quarter, according to the latest data released by the statistical agency, INSEE. 

The public debt increased by €71.7 billion in the third quarter, following the increase of €69.0 billion in the previous quarter, and rose to 113.7% of gross domestic product. 

French government bonds were in focus after the newly appointed prime minister, Francois Bayrou, reiterated his government's commitment to cut the deficit. 

However, Bayrou's government lacks appointments from a wider spectrum of political parties, exposing the newly-formed minority government to a no-confidence vote in the near future. 

France is facing unprecedented political turmoil with four different prime ministers in one year, no annual financial budget, and several bills awaiting the approval of the Assemble Nationale. 

Germany is undergoing political chaos as far-right parties gain in popularity, and the next governing coalition is likely to be short-lived after the general elections in February. 

 

Europe Indexes and Yields

The CAC-40 index advanced by 0.6% to 7,314.89, and the FTSE 100 index inched higher by 0.6% to 8,149.23.

The yield on 10-year German bonds edged higher to 2.32%, French bonds eased to 3.13%, the UK gilts increased to 4.60%, and Italian bonds rose to 3.49%.

The euro edged lower to $1.039; the British pound inched up to $1.247; and the U.S. dollar strengthened to 90.05 Swiss cents.

Brent crude increased $0.70 to $73.32 a barrel, and the Dutch TTF natural gas rose by €0.18 to €45.95 per MWh. 

 

Europe Stock Movers

China-linked stocks were in focus in Paris amid rising expectations of fiscal stimulus measures and clear implementation plans in China. 

However, additional stimulus expectations may not be met soon, as the Chinese policymakers struggle to devise long-term bond offerings and await U.S. trade policy of the incoming presidential administration. 

China's finance ministry said it plans to increase spending in 2025 with more support for increasing consumption to boost economic growth.

LVMH added 0.7% to €632.90, Kering gained 0.4% to €236.40, and Hermes International SCA edged up a fraction to €2,303.0. 

Alstom SA decreased 0.05% to €21.83 after the French rail transportation engineering company said it won two orders worth €760 million from European customers in December. 

Vistry Group PLC dropped 16% to 546.17 pence after the UK-based home builder issued its third profit warning this year, citing delays in completing year-end transactions. 

Vistry Group has lost 39.6% in 2024, and the stock has fallen more than 60% from its high of 1,436 pence in early September.