European Stocks, Euro Stumble on EU Vote Turmoil
AFP/APP
New York: Europe’s stock markets and the euro slid Monday after far-right parties performed well in EU elections, prompting French President Emmanuel Macron to call a snap parliamentary poll and plunging the bloc into political turmoil.
Paris spearheaded the losses, tumbling by more than two percent at one point after Macron announced late Sunday that he was dissolving the National Assembly, the French Parliament’s lower house, and calling a general election.
Both London and Frankfurt also retreated, while the euro fell against the dollar and the pound.
US indices finished higher after a choppy session, with both the S&P 500 and Nasdaq mustering fresh records.
Macron’s political gamble came after far-right parties in France, including National Rally, managed to take almost 40 percent of the vote in France’s EU poll.
Europe’s far-right parties were winners in many places, coming out on top in France, Italy and Austria, while Germany’s AfD came second — but still ahead of Chancellor Olaf Scholz’s SPD party — and the hard-right also did well in the Netherlands.
“The snap election called in France has added to the uncertain tides swirling around financial markets,” said Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown.
“Investors are assessing Macron’s gamble in attempting to reassert his authority after voters shifted en masse to the far right during the EU elections, in both France and Germany.”
France will vote for a new National Assembly on June 30, with a second round on July 7, and with the Paris Olympics set to begin on July 26.
“A sea of red has greeted traders in Europe,” added Scope Markets analyst Joshua Mahony on Monday.
“With that initial vote now less than three weeks away, it comes as no surprise to see weakness across French stocks and the euro as traders weigh up this fresh bout of uncertainty.”
Back in New York, much of the focus anticipated Wednesday’s Federal Reserve meeting.
While the Fed is expected to hold interest rates steady, the central bank’s commentary will be analyzed for its implications for monetary policy later in 2024.
Investors are also looking ahead to a key consumer price report, which will be released on Wednesday.
“While there’s no likelihood that there will be any change to rates, the FOMC’s quarterly Summary of Economic Projections will be watched closely for insight into the Fed’s thinking on future moves” in the rate, said David Morrison, senior market analyst at Trade Nation.
He noted that the CME FedWatch Tool is now pricing in just one rate cut of 0.25 percentage points, with investors split over whether this happens in September or in December, after the US presidential election.
