Early Elections Announced in France
French President Emmanuel Macron announced on June 9 that he was dissolving Parliament and calling for early elections from June 30 to July 7, following a significant victory for the far-right in the European Parliament (EP) elections.
Impact on European Markets
The rise of the far-right in European elections and the possibility of a right-wing government forming after early elections in France, the region’s second-largest economy, have negatively impacted European state bonds. Investors continue to sell off mainly French bonds.
Increase in Bond Yields
Following the EP elections, France’s 10-year bond yield increased by 25 basis points to 3.26%. The spread between France and Germany’s 10-year bond yields reached 84 basis points, the highest level since September 2012.
Stock Market Concerns
The French stock exchange is continuing to decline due to concerns about the potential success of the far-right in the upcoming early general elections on June 30.
Significant Losses in the CAC 40 Index
Notably, the CAC 40 index in France has lost over 5% in value over the last three days following the announcement of early elections.
Analysts’ Warnings
Analysts suggest that if right-wing populists gain a majority in the elections scheduled for June 30, with a second round on July 7, the risk of conflict at the European Union (EU) level could increase, though they state that a debt crisis is unlikely.
Concerns about Budget and Financial Stability
Should far-right parties win in France, there are concerns that their electoral promises could destabilize the national budget and lead to turbulence in financial markets.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
