the investors hastened to rebuke the announcement of early French presidential elections, Emmanuel Macronas it triggered warnings of further deterioration of the country’s finances, and even fears of a new euro crisis.
French government bonds, after Emmanuel Macron’s announcements, are at the center of the decline, which premium investors demand to own 10-year OATs on German bunds leading to the biggest weekly record jump, according to Bloomberg.
The sell-off wiped about $200 billion (186 billion euros) off the value of French stocks, with banks Société Générale SA, BNP Paribas SA and Crédit Agricole SA – all major holders of government debt – losing more than 12% each.
The CAC 40 index of the Paris stock market fell 6.2% for the week, giving up its gains for the year and heading for the biggest weekly decline since March 2022. The decline puts France at risk of losing its crown as largest stock market in Europe.
The euro was the worst performing major currency this week against the dollar.
Investors are reeling from the prospect of Macron’s centrist, pro-business Renaissance party still losing parliament in two-round elections on June 30 and July 7. This could result in the president appointing a prime minister. from the far-right National Alarm party of Marine Le Pen or a left-wing coalition.
Macron has said he will not resign regardless of the outcome of the election.
Share prices fell further today after the leftist parties agreed to present a united front in the elections. They have promised to roll back most of Macron’s seven years of economic reforms and abandon the European Union’s fiscal pact that governs debt and deficits.
The rise of the far right or left would mean higher government spending at a time when France has failed to curb its budget deficit, while also calling into question how committed the country is to closer ties with the EU.
“The electoral game is developing and crystallising a toxic set of risks that threaten a long-term period of deterioration in the EU and may threaten a new crisis in the euro,” said Krishna Guha, vice president of Evercore ISI. “It is difficult to overstate the importance for the markets and the functioning of the EU that France is still considered a ‘core’ country with a relatively mainstream government.
The article France: 186 billion euros lost from French stocks after Macron called early elections published by NewsIT .