French election shock hits stocks, banks and the euro

The decision by French President Emmanuel Macron to call a snap election after losing to the far right in a vote for European lawmakers roiled markets and the euro Monday.

French markets and the euro were roiled Monday by President Emmanuel Macron’s surprise decision to call a snap election after his party lost to the far right in a vote for European lawmakers. Big gains for the far right in the French election could force Macron to govern with a hostile parliament, making it harder for his centrist administration to pursue its policy agenda and raising doubts about its ability to put government finances on a more sustainable footing. France’s CAC 40 index, which represents 40 of the biggest companies listed in Paris, fell 1.8% by 11.02 a.m. ET, with banks among the biggest losers. Europe’s benchmark Stoxx 600 index was trading 0.5% down on the day by the same time. The euro fell 0.6% against the US dollar in late-afternoon trade, sinking to its lowest level in a month. Against the British pound, the currency, shared by 20 countries in Europe, also dropped 0.6% to stand at its weakest level in nearly two years. Macron dissolved the French parliament and called the election after an exit poll Sunday showed that his Renaissance party was set to be trounced by the National Rally, a far-right opposition party, in the European elections. The first round of the French election is scheduled for June 30, followed by a second round on July 7. Under the French system, parliamentary elections are held to elect the 577 members of the lower house, the National Assembly. A separate election is held to choose the country’s president, and this is not scheduled until 2027.