French stocks experienced a steep drop on Monday (10/06/2024) after President Emmanuel Macron announced unexpected snap elections following his party's loss in the EU elections. This move could shift significant political power to the far-right, potentially altering the economic landscape.
At market opening, shares in BNP Paribas, France's largest bank, plummeted nearly 8% and were down 5.3% by 14:20 GMT. Other French banks, including Credit Agricole and Societe Generale, also faced substantial losses. Alongside them, French highway operators Eiffage and Vinci saw their shares fall by around 5%.
Macron’s announcement has raised the prospect of Marine Le Pen’s National Rally (RN) party gaining control over domestic policies, including economic strategies. The RN’s platform includes increased public spending despite France's high debt levels, which could elevate funding costs for French banks. Additionally, the RN aims to nationalise French motorways to cut tolls by 15%.
The energy sector was also impacted, with shares in the French gas and electricity company Engie dropping 4.5%, marking its biggest intraday decline in over a year. Renewable energy firm Voltalia fell 6.5%. Overall, France's blue-chip index CAC 40 decreased by 1.6%.
