On Monday, French stocks experienced an uptick as the market responded to an unexpected victory for the left in the recent parliamentary elections. The CAC 40 recovered from initial losses to climb 0.5% by 10:00 a.m. London time (5 a.m. ET). Meanwhile, the euro remained steady against the dollar, and bond market activity was relatively subdued.
In broader European markets, the U.K.’s FTSE 100 held steady, Germany’s DAX increased by 0.43%, and Italy’s FTSE MIB rose approximately 1%. The pan-European STOXX 600 also saw gains, up 0.3%.
The New Popular Front, France’s left-wing coalition, secured the most seats in the parliamentary elections over the weekend, defying expectations of a far-right surge. However, they did not achieve an absolute majority, raising the prospect of a hung parliament.
François Digard, head of French equity research at Kepler Cheuvreux, noted that the market had anticipated a hung parliament. “You have a hung parliament as expected so last week, the market has played this out … It was just expected to be more right-wing and at the end it is left-wing,” he told CNBC.
Deutsche Bank strategists expressed concerns over the New Popular Front’s proposed fiscal policies. They pointed out that the far-left was already discussing wealth taxes and increased corporate taxes, which are not market-friendly. They also highlighted the difficulty in forming a stable government, predicting political paralysis over the next year.
This follows a significant political shift in Britain, where the opposition Labour Party achieved a landslide victory in the general election, ending 14 years of Conservative rule.
In corporate developments, Britvic, a soft drinks manufacturer, accepted a takeover bid of £3.3 billion ($4.2 billion) from Carlsberg, which offered 1,290 pence per Britvic share. This improved bid came after an initial offer of 1,200 pence per share was rejected.
No major corporate earnings reports are expected on Monday, and the data calendar is light, with only German trade data scheduled for release.
In the Asia-Pacific region, stock performances were mixed on Monday. In the United States, futures edged lower as investors awaited inflation data, which could provide insights into this year’s market trends and the Federal Reserve’s next steps. The June consumer price index is expected on Thursday, followed by producer price index data on Friday.
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.
