Official statements from the French government or NATO

Macron's Snap Election Gamble Sparks Political Turmoil, French Stocks and Bonds Plummet

Jun 14, 2024, 01:15 PM

French President Emmanuel Macron's decision to call snap parliamentary elections has thrown the country into political turmoil. The move, seen as a risky gamble, follows a significant loss for Macron's party in the European elections. The far-right National Rally, led by Marine Le Pen, and a newly united left-wing coalition, the New Popular Front, are now the main contenders. This political uncertainty has led to a substantial sell-off in French stocks, with the CAC 40 stock index erasing its gains for the year. Since June 6, French small and mid caps are down over 7% while big caps are down around 5%. French bond yields have also surged, widening the spread over German bonds to the highest level since 2017, with the 5-year sovereign CDS reaching 36 bps. Finance Minister Bruno Le Maire has warned that the political crisis could lead to a financial crisis and even a potential exit from the EU if the left-wing coalition wins. The situation has also raised concerns about France's support for Ukraine, as Macron has been one of Kyiv’s strongest supporters. Protests are expected across France against the far-right's rise, with significant implications for both domestic and foreign policies.