Europe open: Stoxx up as investors eye French political stalemate

8th Jul 2024 08:27

(Sharecast News) - European shares opened higher on Monday as investors digested the political stalemate in France after the second round of national elections that saw a shock first-place result for the left-wing alliance, but with no single group able to achieve an absolute parliamentary majority.

The Stoxx 600 index was up 0.23% to 517.8 in early deals. France's CAC 40 was up 0.26% after the leftwing New Popular Front won 182 seats as voters rejected the idea of a far-right anti-immigrant government but then couldn't decide between the centrists and socialists.

President Emmanuel Macron's centrist Together alliance won 163, while Marine Le Pen's far-right National Rally trailed in third with 143 seats after leading polls in the first round. Incredible tactical voting made sure there would be no repeat on Sunday.

However, despite high turnout estimated at about 67%, no group won the absolute majority of 289 seats required to form a government. The left-wing alliance is made up of the Socialist party and the far-left France Unbowed, which made the largest gains winning between 83-90 seats,

"The leader of France Unbowed, Jean Luc Melenchon, has said that he will implement his 'entire programme' and he has refused any negotiation with President Macron's centrist government. Melenchon's main policy priorities include rolling back Macron's pension reforms, freezing the price of some consumer staples and raising the minimum wage," said Kathleen Brooks, research director at trading firm XTB.

"These are policies that could send shivers down the spine of investors. France has a budget deficit of 5.5%, and concerns about its fiscal health have pushed the French - German 10-year bond yield spread to its highest level since the sovereign debt crisis."

"If the far left do form a government, their policies, if enacted, would certainly aggravate France's fiscal position, and put the country on course to clash with Brussels over a breach of fiscal rules."

In equity news, Carlsberg shares rose as the Danish brewing giant said its sweetened £3.3bn offer for Robinsons barley water maker Britvic had been accepted.

Ocado was up as the online grocery group said it was planning to build a third customer fulfilment centre in Japan as part of its ongoing partnership with Japanese peer AEON.

Shares in Delivery Hero slumped 11% after the German online food takeaway firm said it may face a fine of more than €400m due to competition law breaches.

Reporting by Frank Prenesti for Sharecast.com