European stocks saw a significant rally on Monday, with French shares taking the lead following the far-right National Rally (RN) party’s historic gains in the first round of the parliamentary election. Despite these gains, the margin was narrower than some polls had anticipated.
France’s blue-chip CAC 40 index soared by 2.6%, spearheading the gains among regional markets. The country’s primary lenders, including BNP Paribas, Societe Generale, and Credit Agricole, advanced between 4.8% and 7.9%. This contributed to the region-wide STOXX 600 index climbing by 1% by 0709 GMT, following four consecutive sessions of losses.
The RN and its allies secured 33% of the vote, followed by a left-wing bloc with 28%, and President Emmanuel Macron’s centrists with only 20%. However, the final outcome hinges on several days of negotiations before the July 7 run-off. According to Ipek Ozkardeskaya, senior analyst at Swissquote Bank, the market reaction was largely a “buy the rumour, sell the fact” scenario, coupled with speculation that the National Rally might not achieve an absolute majority in the second round.
On Friday, the CAC 40 had closed at its weakest level in over five months due to concerns about France’s fiscal discipline under the new government. Among individual stocks, Atos surged by 11.7% as the French technology company reached an agreement with a group of banks and bondholders on terms for its debt restructuring. Nestle saw a 1.1% rise after its CEO stated in a local weekend paper interview that the Swiss food giant aims for stable growth in sales volumes from the second quarter through the rest of the year as cost inflation eases.
European markets experienced a notable upswing, particularly driven by French shares, following the RN party’s election performance. While the political landscape remains uncertain, the positive market movements reflect investor reactions and expectations.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
