David McNamara: Markets re-price on the back of French political risk

Markets are selling off French assets, with the large banks particularly impacted

Markets have begun selling off French assets as polls suggest President Macron’s party is set for a heavy defeat in parliamentary elections on June 30 and July 7.

Politics has moved to the fore in European markets, following the conclusion of the EU parliamentary elections and the shock announcement of French parliamentary elections by President Macron. 

While much media attention has focused on the rise of the extremes in the European Parliament, the results show the “centre” has broadly held its majority. Taking the three traditional centre groupings together (EPP, Renew, S&D), the combined share of seats is expected to be 56% compared to 59% in the last parliament.