The French stock market is going through a period of turbulence since the announcement of the dissolution of the National Assembly and early legislative elections. Investors, worried about political uncertainty and its impact on the economy, caused stock prices to plummet. This French storm does not spare other European markets, which are also suffering the collateral effects of French political instability.
The French stock market under pressure
Last week, the CAC40 suffered a heavy fall of 6.3% in just five sessions, a major and rather rare event. This weekly decline is comparable to:
- that of -10.2% recorded at the end of February 2022 after the Russian invasion of Ukraine,
- that of -6.4% in October 2020 following the announcement of the second confinement linked to Covid-19 by Emmanuel Macron.
The most impacted sectors are banking (-12% over the week) and concessions and collective services (-11%), penalized by political uncertainties. This pressure should persist until the verdict of the early legislative elections at the end of June.
According to the analysts, this sharp drop reflects investors' concerns about the political turmoil in France. They are perceived as a potential “black swan” likely to have major and unpredictable consequences on the economy.
What about the European and American stock market?
The concern is not limited to France. There European stock market as a whole has suffered in recent days. On the other hand, the American markets will continue to rise. The Nasdaq 100 even reached a new record last week with an increase of 3.5%.
However, this performance hides disparities. Alone large caps like Microsoft, Apple and Nvidia are really doing well. They grew by 4 to 9%. Small and medium-sized businesses are struggling to keep up.
The question that now arises is whether the French stock market will manage to recover from this political storm. A rebound is possible, especially if the results of the legislative elections help to dissipate uncertainties and establish a stable government.
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