Europe midday: French stocks slump on election woes; Stoxx in retreat
14th Jun 2024 11:29
(Sharecast News) - European equities slumped into the red on Friday, continuing a miserable week, with French stocks weaker again on worries over the country's upcoming snap election and reports that luxury labels were discounting goods in China to shift inventory.
The Stoxx 600 index was had erased small gain in the morning to be down 1.03% to 510.78 after the pan-regional benchmark plunged 2% on Thursday, marking its biggest fall in almost a year.
France's CAC 40 had plummeted 2.37% to 7,525 after French President Emmanuel Macron shocked markets with his decision to call a snap poll in response to gains made by the far-right in European Parliament elections.
"Macron's surprise decision is likely to result in a hung parliament, which would translate into policy paralysis. The possibility of the far right obtaining an absolute majority of seats and gaining control of domestic policy cannot be fully discounted either," said Oxford Economics.
"Either way, France's challenges were recently highlighted by a rating downgrade from S&P, with France's poor fiscal metrics likely to remain in focus next week as the European Commission is expected to kick-start the process to place France under the Excessive Deficit Procedure."
"The political gridlock further reduces the chances of France undergoing fiscal consolidation."
European luxury stocks were under the cosh after a report that some labels were heavily discounting products in China to shift goods as local consumers cut back on spending.
Kering, Burberry, Hugo Boss, LVMH, Christian Dior, Moncler, Hermes and Richemont were all lower.
In other corporate news, British supermarket chain Tesco was up after it held profit guidance for the year after reporting a 4.6% rise in underlying UK sales for the first quarter.
Shares in UK fintech Wise fell again after the money-transfer company on Thursday forecast lower income growth this year.
Reporting by Frank Prenesti for Sharecast.com