The Paris stock exchange faced its worst weekly performance in over two years on Friday, June 14, causing a ripple effect across other European markets and the euro. This decline comes as investors express concern over France’s upcoming snap election.
The CAC40 index in Paris dropped over 3% at one point before closing 2.7% lower, marking a 6.2% decrease for the week, its sharpest decline since March 2022. This trend also impacted other European markets, with the Milan stock exchange down 2.8% and Frankfurt’s DAX finishing 1.4% lower. The euro fell 0.4% against the dollar to $1.0697.
Investors are particularly uneasy about the June 30 election, as evidenced by the rise in 10-year French sovereign bond yields and widening differences with Germany’s bond costs.
French President Emmanuel Macron’s decision to call for legislative elections following his party’s defeat in the European Parliament elections has injected political uncertainty in the markets. The major left-wing parties in France have united, presenting a common platform, while Marine Le Pen’s far-right Rassemblement National has pledged a national unity government if her party emerges victorious.