European Markets Drop Amid Political Instability. European stock markets and the euro fell early Monday after far-right parties advanced in the European elections and President Emmanuel Macron’s alliance suffered major losses, leading him to call a snap election.
In early trade, the euro dropped 0.5% against the dollar to a one-month low of $1.0747, according to Factset. France’s blue-chip CAC 40 index declined by 2%, with banks like Societe Generale, BNP Paribas, and Credit Agricole falling over 4%. The pan-European Stoxx 600 decreased by 0.8% in early trading.
France’s 10-year bond yield increased by 5.5 basis points to 3.170%, while the 10-year Bund yield rose 1 basis point to 2.630%, according to Tradeweb. The euro had already weakened on Friday due to a strong U.S. jobs report, which is a key factor ahead of the Federal Reserve’s policy meeting this week.
France’s far-right opposition party, National Rally, emerged as a significant winner in the European elections late Sunday. Marine Le Pen’s party seemed poised to become the largest single party in the European Parliament, although mainstream pro-European Union parties were expected to retain their majority in Brussels.
In response to the French election results, Macron announced the dissolution of parliament and called for new elections. The first round will be held on June 30, followed by a second round on July 7, Macron stated on Sunday. European Markets Drop Amid Political Instability.
