London pre-open: Stocks seen flat as investors mull French election news

8th Jul 2024 07:34

(Sharecast News) - London stocks were seen little changed at the open on Monday as investors turned their attention to France, where the election resulted in a hung parliament.

The FTSE 100 was called to open down around two points.

Axel Rudolph, senior market analyst at IG, said: "Even though the left-wing New Popular Front (NFP) unexpectedly won the second round of the French legislative elections with 182 seats and gained a relative majority, financial markets are likely to remain on edge. This is because the NFP - an uneasy alliance of green, socialist, France Unbowed and the communist party - needs a coalition partner to obtain more than the 289 out of 577 seats required in the French assembly to govern.

"The NFP will probably have to form a coalition with president's Macron's centrist Together party. It did far better than expected and gained 163 seats, slightly more than the far-right National Rally (NR) with 143 seats, the biggest loser in the second round of the French presidential elections.

"Despite the highest turnout for decades of around 60%, there are no real winners in the French elections as the country enters a new era of parliamentary democracy and is split into three factions. France will likely see a big change in the way it is governed with the centre of gravity shifting from the president to parliament.

"Diametrically opposing views among political parties - which aren't known for their conciliatory stance - will make forming a coalition that can govern France difficult.

"Despite Jordan Bardella's far-right NR party suffering a major election defeat, he and his compatriots won 50 more seats than in the 2022 French National Assembly and are already focusing on the 2026 mayoral elections and the 2027 presidential election.

"More political uncertainty lies ahead for Europe's third largest economy."

In UK corporate news, Danish brewing giant Carlsberg said it had reached a deal to buy UK soft drinks maker Britvic for £3.3bn after two previous bids were rejected.

Under the terms of the acquisition, Britvic shareholders will get £13.15 a share, including a special dividend of 25p a share.

Britvic two weeks ago said it had rejected two proposals from Carlsberg, one at £12 and another at £12.50p a share.

Online grocery group Ocado is planning to build a third customer fulfilment centre (CFC) in Japan as part of its ongoing partnership with Japanese peer AEON.

The new Kuki-Miyashiro facility, which will go live in 2027, will operate using the Ocado Smart Platform and follows other Ocado-AEON CFCs in Midori-ku and Hachioji.

"Today is an exciting moment for AEON and Ocado's relationship as we deepen our already strong partnership," said chief executive Tim Steiner.