The calling of early parliamentary elections in France continued to weigh heavily on the country’s financial markets on Tuesday.
The stock markets fell noticeably and the value of the euro also remained under pressure. Yields on French, but also Italian, government bonds rose sharply.
On Sunday, French President Emmanuel Macron surprisingly announced early elections for the National Assembly. These will take place on June 30 and July 7.
The reason for the announcement was the clear victory of the right-wing nationalist National Rally (RN) in the European Parliament elections. According to polls, National Rally is also ahead in the parliamentary elections.
France’s left-wing parties aim to enter the elections as an alliance, which also worsens the electoral prospects for Macron’s centrist bloc. Both the right-wing and left-wing parties make big spending promises to voters.
The rating agency S&P Global Ratings, formerly Standard and Poor’s, recently downgraded France’s credit rating. On Tuesday, ratings agency Moody’s said the early elections would further jeopardize fiscal consolidation in France.
The prices of French government bonds came under pressure again on Tuesday. The yield on 10-year government bonds in turn rose to 3.32%, the highest level since November 2023. Yields also rose noticeably in Italy.
The French CAC 40 fell 1.22% to 7,798.5 points in the early afternoon. The euro fell to $1.0724, the lowest level since early May.
