French election shock hits stocks and euro

() – French President Emmanuel Macron’s decision to call early elections following major gains by far-right candidates in the European Parliament elections rattled markets on Monday morning. France’s CAC 40 index, which represents 40 of the largest companies listed in Paris, fell 1.9% as of 5:06 a.m. ET, with banks among the biggest losers.

The European benchmark Stoxx 600 index was trading 0.7% lower at the same time. The euro, used by 20 countries in Europe, fell 0.4% against the US dollar in morning trading, hitting its lowest level in a month. The yield, or interest rate, on France’s benchmark government bonds rose on Monday to its highest level since late November.

Higher yields indicate investors want a higher premium to buy French bonds given political uncertainty.

“A right-wing majority in the (French parliament) would hinder any reform plan. The deficit outlook in France is already weak and this would further raise market concerns,” wrote Mohit Kumar, chief European economist at Jefferies, an investment bank. in a note on Monday.

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