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Market Analysis

French Stock Futures Surge, Bond Prices Rise Post-Election
Amos Simanungkalit · 29.3K Views

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French stock futures surged and government bond prices increased on Monday as investors reacted to the anticipated victory of the far-right National Rally in the first round of parliamentary voting on Sunday.

Marine Le Pen's National Rally (RN) party and its allies achieved a historic win, but the final result will hinge on upcoming alliance-building and next week's run-off vote.

CAC 40 futures climbed nearly 3%, indicating a significant rally in the blue-chip index at the start of trading. French 10-year government bond prices rose, causing yields to drop by about 2 basis points to 3.272%.

The yield spread between French 10-year bonds and German 10-year bonds narrowed by 7 basis points to 72.8 basis points, marking the largest one-day drop since November 2022, though still close to last week's 12-year highs above 82 basis points.

According to official results from the interior ministry on Monday, the RN and its allies garnered 33% of the vote, followed by a leftwing bloc with 28% and President Emmanuel Macron's centrists with just 20%.

"A hung parliament remains the most likely outcome. While the RN could still potentially win an absolute majority in the second round, this now appears slightly less probable. The risk that the united left could take power and implement its costly agenda seems to have diminished further," said Holger Schmieding, chief economist at Berenberg.

Meanwhile, the euro rose by as much as 0.5% to a two-week high of $1.0767.

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.

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