Europe midday: Shares up despite far-right lead in French elections

1st Jul 2024 11:03

(Sharecast News) - European shares opened higher at the start of the new trading week as investors assessed first round results in France's snap parliamentary election which showed the far-right anti-immigrant National Rally (RN) party in front.

The pan-regional Stoxx 600 index was up 0.70% to 515.02, while France's CAC 40 was up 1.61% as the NR took the lead but appeared to be struggling for an outright majority in next Sunday's second round of voting. President Emmanuel Macron's centrist alliance came third.

Leaders of both the leftwing New Popular Front and Macron's group on Sunday night said they would withdraw their own candidates in districts where another candidate was better placed to beat the RN in the July 7 runoff.

"Coming off the back of four successive daily declines, today's rebound for the CAC highlights how we have seen traders 'sell the rumour, buy the fact'. The 33% share of vote taken by the right-wing cluster of RN and LR came in somewhat shy of expectations, and polls highlight a strong possibility that they fail to form a majority by achieving the 289 lawmakers needed," said Scope Markets analyst Joshua Mahony.

"Nonetheless, the forecasts that they reach between 260 and 310 seats does highlight how that majority could be on a knife-edge as we head into next weekend's vote."

The downturn in the eurozone's manufacturing sector wasn't as bad as initially feared in June, with initial estimates being revised higher on Monday, though the contraction across the region remained firmly entrenched.

According to the monthly manufacturing survey by S&P Global and the Hamburg Commercial Bank (HCOB), the purchasing managers' index (PMI) was pushed up to 45.8 last month, up 0.3 points from the first reading of 45.6 released two weeks ago.

Notably, manufacturing PMIs from Germany, France and Italy were all revised slightly higher for the month.

Investors will also be eyeing the UK General Election where incumbent Prime Minister Rishi Sunak's Conservative Party is trailing heavily in the polls against a backdrop of the highest tax burden and lowest living standards in 80 years, weak economic growth and crumbling public services.

In equity news, shares in Anglo American fell on news of a production suspension at its steelmaking coal mine in Queensland, Australia after a coal gas ignition incident over the weekend.

Reporting by Frank Prenesti for Sharecast.com