European stocks slip as traders digest French election result

"Trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome," Deutsche Bank strategists said.

LONDON — European stocks fell at the open on Monday as markets reacted to an expected hung parliament in France after a surprise win for a left-wing coalition of parties.the largest number of seats in this weekend's parliamentary elections, scuppering an expected surge for the far-right. However, the coalition failed to secure an absolute majority, early data showed, leaving markets digesting the possibility of a hung parliament.

Deutsche Bank strategists led by Jim Reid noted that the tactical vote to block the far-right had worked so well that it"swung the pendulum in the opposite direction but without anyone having an overall majority." "The NPF have the most fiscally aggressive program in terms of both spending and taxation and the market will be suspicious that the prospect of them being in government now or later will bring higher deficits with the associated concerns about debt sustainability and tense relations with Europe," they wrote Monday."Last night the far-left were already talking about wealth taxes and increases on taxes on corporates which won't be market-friendly.

There are no major corporate earnings due Monday. It's also quiet on the data front, with just German trade data due.Monday. In the United States, futures ticked lower as investors looked ahead to inflation data for hints on this year's market rally and the next steps by the Federal Reserve. The June consumer price index is due Thursday, with producer price index data due Friday.

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