French and European elections shake up markets, but only perhaps in the short term

Financial markets/economy

Posted by MoneyController on 17.06.2024

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The outcome of the European elections found much space in the newspapers, especially in relation to what happened in some large countries. But what are the consequences for the markets?

European elections and voting in France

Perhaps the most important event that followed the European elections concerned France, where French President Emmanuel Macron (who has already stated that he will remain in office until the natural end of his term in 2027) called new elections. The reason was the electoral success of the largest opposition force today, the Rassemblement National, led by Marine Le Pen and Jordan Bardella. But what are the repercussions of these events on the financial markets?

Fears about instability may be excessive

In the 'Sole 24 Ore', Morya Longo reports on some of the considerations that were made during the Amundi World Investment Forum (held in Paris). In an interview with Longo, Anna Rosenberg, Head of Geopolitics at Amundi Investment Institute, believes that these elections will not have any particular consequences and that some assumptions on the instability of countries such as France or Germany (where the SPD, the party of Chancellor Olaf Scholz, suffered a tough electoral defeat) are excessive.

The results on the stock exchanges

In the meantime, however, Longo points out in 'Sole 24 Ore', 'the stock exchanges have posted rather negative results. Looking at the last five days, the results are as follows: almost -4% for the CAC 40 and -3% for the German DAX, -3.37% for the Spanish IBEX, and even the FTSE MIB closed with a loss, despite the fact that the results - an isolated case in Europe - strengthened the leadership of the Prime Minister, Giorgia Meloni, and her party, Fratelli d'Italia.

More than fears, caution in view of the French elections

Another interesting movement, Longo's article in 'Sole 24 Ore' reads, concerns the government bond market: interest on French, Italian and Spanish government bonds has risen, while interest on German bonds has fallen. In this regard, Longo reports a consideration by Intermonte's chief global strategist, Antonio Cesarano, who points out that investors rather than showing fear seem to be behaving prudently, waiting to understand, at least, the outcome of the French elections.  

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