Europe open: Shares fall amid political turmoil as Macron calls snap poll

10th Jun 2024 08:02

(Sharecast News) - European shares opened lower on Monday as investors assessed the impact of gains made by far-right anti-immigrant political parties in European Parliament elections that saw France President Emmanuel Macron call a snap poll in response to his party suffering a heavy defeat.

The pan-regional Stoxx 600 index was down 0.71% at 520 in early deals. France's CAC 40 slumped almost 2% to 7,583. Germany's DAX fell 0.52% to 18,444 and Spain's IBEX 35 was off almost 1% to 11,293 as left-wing parties in those states also struggled.

The euro also slumped to its lowest level for a month, falling 0.41% against the dollar to $1.07 and 0.33% against the British pound to £0.84.

Market sentiment was also hampered by stronger-than-expected US jobs data on Friday that showed hiring and wage growth picked up in May - a cause for concern for the Federal Reserve as it plots a path for interest rate cuts this against a backdrop of persistent inflation.

"The latest jobs report put the cat among the pigeons with a reading that not only exceeded expectations but also threw into the question the weaker recent economic data which had propelled hopes of an imminent interest rate cut," said Interactive Investor head of markets Richard Hunter.

"The news is clearly positive for the US economy, suggesting that it remains in growth mode despite higher rates, but plays against the market narrative which had initially been expecting several rate cuts this year, whereby the consensus has now dropped nearer to one."

Eyes will turn to the Fed, which starts its two-day policy meeting on Tuesday and will announce its latest decision on interest rates a day later. A CPI update for May is also due the same day.

In equity news, French banks all fell amid the political turmoil caused by Macron's electoral gamble. Societe Generale, BNP and Credit Agricole were all down between 4 and 6%.

Reporting by Frank Prenesti for Sharecast.com