Le Pen somewhat eases investor concerns with promise not to push out Macron

Marine Le Pen said she would not try to push out Emmanuel Macron if she wins France’s snap parliamentary election in an apparent appeal to moderates and investors. Picture: AP/Manu Fernandez

France’s political upheaval has led Paris to lose its spot as Europe’s biggest equity market to London, less than two years after winning that title from the UK.

President Emmanuel Macron’s shock announcement of a snap election sparked a rout that wiped off about $258bn from the market capitalisation of French firms last week. Shares of banks Societé Generale, BNP Paribas SA and Credit Agricole — all big holders of government debt — lost more than 10% each.

Irish shares also joined in the Europe-wide sell-off as French finance minister Bruno Le Maire warned last week the eurozone's second-biggest economy faced the risk of a financial crisis if the far right were to win snap elections in the coming weeks.

Stocks in France, meanwhile, are now collectively worth about $3.13tn, narrowly losing out to the UK at $3.18tn, according to data compiled by Bloomberg. The CAC 40 Index has erased all its gains for 2024 — a sharp reversal from scaling record highs a month ago.

“We are in a period where there are no certainties for three to four weeks and the market could unfortunately become more unstable,” said Alberto Tocchio, a portfolio manager at Kairos Partners.

However, the selloff in European stocks and bonds paused on Monday after assurances from France’s far-right leader Marine le Pen she would respect political institutions if she wins the upcoming snap parliamentary election.

The Paris market bounced as much as 1% following last week’s 6.2% tumble that wiped more than $200bn off its value. French bond yields were little changed near 3.18% even as their premium relative to German peers stayed near their widest in years. The euro steadied just off six-week lows against the dollar.

The Stoxx 600 was little changed, while US equity futures were mixed, with contracts on the S&P 500 dipping and those on the Nasdaq 100 slightly higher.

Ms Le Pen said she would not try to push out Mr Macron if she wins France’s snap parliamentary election in an apparent appeal to moderates and investors. Her group, the National Rally, is on track to become the biggest party in the lower house.

Sentiment remains fragile. Citigroup analysts warned a potential far-right majority in France was among the risk factors for European equities.

• Bloomberg, with additional reporting by the Irish Examiner