French Stocks Recover From Initial Fall After Leftist Alliance Win

By Cristina Gallardo

French stocks rose while government bonds fell in early trading after a party alliance led by the far-left emerged first in the country's parliamentary elections, pushing France toward political paralysis.

France's CAC 40 index rose 0.42% to 7709.66, after opening 0.42% lower in early trading Monday after the left-wing New Popular Front won the second round of the elections Sunday, but fell short of an absolute majority.

Societe Generale shares traded 1.1% lower, while BNP Paribas shares fell 1%. Teleperformance was the worst performer on the CAC 40, down 2.8%.

The election results in France, the second biggest economy in the euro zone, triggered losses in some other European markets. The Stoxx Europe 600 index fell 0.16% while the FTSE 100 opened 0.3% lower. Meanwhile, Germany's DAX was up 0.13%.

The euro traded broadly flat against the dollar at $1.08 and at 0.85 against the pound in early trading.

The 10-year OAT-Bund yield spread traded four basis points lower at 68 basis points, according to Tradeweb.

The NPF--an alliance led by Jean-Luc Melenchon's France Unbowed that includes the mainstream Socialists, the Communists and the Greens--came first with 188 seats in the 577-seats National Assembly, according to the French interior ministry Monday.

French President Emmanuel Macron's centrist Ensemble alliance came second with 161 seats, followed by Marine Le Pen's far-right National Rally and allies in third place with 142 MPs, according to the ministry.

No party succeeded in securing the 289 seats required to form a government, which means France faces the prospect of a hung parliament or a coalition.

Melenchon has insisted in implementing his entire program, which includes cutting retirement age from 64 to 60, and has refused any negotiation with Macron's centrists. The identity of the prime minister also remains unknown.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

July 08, 2024 04:19 ET (08:19 GMT)

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