Investors ditch French stocks and bonds amid election nerves

Financial Times

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Investors sold French stocks and government debt for a second consecutive day on Tuesday, as markets reacted to political turbulence in the wake of President Emmanuel Macron’s decision to call a snap parliamentary election.

The Cac 40 stock market index fell 0.9 per cent to a four-month low following a 1.3 per cent decline on Monday.

Markets have been rocked by the prospect of a possible victory in the parliamentary vote for the far-right forces of Marine Le Pen, which trounced Macron’s centrists in EU elections on Sunday.

Tuesday’s moves came after the Europe 1 radio station reported that the president had discussed resigning if he suffered another heavy defeat in the two-round election to parliament, scheduled for June 30 and July 7.

A person close to Macron said the rumours were unfounded.

Macron pushed back a press conference planned for Tuesday until Wednesday.

As investors responded to an apparent increase in political risk, the yield on France’s benchmark 10-year bond, which moves inversely to price, rose 0.08 percentage points to 3.32 per cent by early afternoon.

In a setback for Macron’s hopes to form a united front with the forces of the centre-left and centre-right to take on Le Pen’s Rassemblement National, the country’s leftwing parties struck a pact of their own on Monday night.

This includes the Socialists, the Communists, the Greens and the far-left France Unbowed party, but not the president’s centrist alliance.

This is a developing story

The full article is available here. This article was published at FT Markets.