French stocks and bonds sink ahead of election

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Paris’s Cac 40 stock index on course for worst quarter in two years

The slump in France’s financial markets deepened on Friday ahead of the first round of parliamentary elections that are expected to result in victory for the far-right Rassemblement National. Paris’s Cac 40 stock index fell 0.7 per cent to a five-month low, taking its losses to 6.5 per cent since President Emmanuel Macron called the snap vote earlier this month. French stocks notched their worst quarter in two years, having tumbled just over 9 per cent from an all-time high hit in mid-May.

France was “unfortunately becoming a country with weak governability and a dubious fiscal outlook”, said Christian Kopf, head of fixed income at Union Investment Management. “The biggest risk for France at the moment is not a ‘Liz Truss moment’ or a repeat of the Greek sovereign debt crisis, but a continued erosion of sovereign creditworthiness, which would ultimately make uninvestable for very conservative and rating-constrained investors,” Kopf added.

 

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