European stocks, euro stumble on EU vote turmoil / Photo: Hannah McKay - POOL/AFP
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European stocks, euro stumble on EU vote turmoil
Europe's stock markets and the euro slid Monday after far-right parties performed well in EU elections, prompting French President Emmanuel Macron to call a snap parliamentary poll and plunging the bloc into political turmoil.
Paris spearheaded losses, tumbling by more than two percent at one point after Macron revealed late Sunday that he was dissolving the National Assembly, the French Parliament's lower house, and calling a general election.
Macron's political gamble came after far-right parties in France, including National Rally, managed to take almost 40 percent of the vote in France's EU poll.
The euro fell versus the dollar and pound in the wake of the news, while Frankfurt stocks slid and London also declined.
Europe's far-right parties were winners in many places, coming out on top in France, Italy and Austria, while Germany's AfD came second -- but still ahead of Chancellor Olaf Scholz's SPD party -- and the hard-right also did well in the Netherlands.
"The snap election called in France has added to the uncertain tides swirling around financial markets," said Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown.
"Investors are assessing Macron's gamble in attempting to reassert his authority after voters shifted en masse to the far-right during the EU elections, in both France and Germany."
- Sea of red -
France will vote for a new National Assembly on June 30, with a second round on July 7, and with the Paris Olympics set to begin on July 26.
"A sea of red has greeted traders in Europe," added Scope Markets analyst Joshua Mahony on Monday.
"With that initial vote now less than three weeks away, it comes as no surprise to see weakness across French stocks and the euro as traders weigh up this fresh bout of uncertainty."
Global equities were already in the doldrums as a mixed jobs report on Friday had eased worries about the US economy -- but dented hopes of Federal Reserve interest rate cuts any time soon.
With the Fed meeting this week, investors are keenly awaiting its updated "dot plot" outlook for borrowing costs, with commentators split on when the first rate cut may be coming.
Wall Street stocks got off to a lacklustre start as trading got underway Monday, with the Dow flat and the S&P 500 and Nasdaq dipping ahead of Tuesday and Wednesday's meeting of the central bank's Federal Open Market Committee.
"While there's no likelihood that there will be any change to rates, the FOMC's quarterly Summary of Economic Projections will be watched closely for insight into the Fed's thinking on future moves" in the rate, said David Morrison, senior market analyst at Trade Nation.
He noted that the CME FedWatch Tool is now pricing in just one rate cut of 0.25 percentage points, with investors split over whether this happens in September or in December, after the US presidential election.
- Key figures around 1330 GMT -
Paris - CAC 40: DOWN 1.9 percent at 7,850.68 points
Frankfurt - DAX: DOWN 0.8 percent at 18,418.56
London - FTSE 100: DOWN 0.5 percent at 8,207.17
EURO STOXX 50: DOWN 1.2 percent at 4,989.53
Euro/dollar: DOWN at $1.0740 from $1.0805 on Friday
Euro/pound: DOWN at 84.51 pence from 84.91 pence
Dollar/yen: UP at 156.90 yen from 156.71 yen
Pound/dollar: DOWN at $1.2708 from $1.2722
New York - Dow Jones: FLAT at 38,795.61
New York - S&P 500: DOWN 0.2 percent at 5,337.56
New York - Nasdaq Composite: DOWN 0.3 percent at 17,086.89
Tokyo - Nikkei 225: UP 0.9 percent at 39,038.16 (close)
Hong Kong - Hang Seng Index: Closed for a holiday
Shanghai - Composite: Closed for a holiday
West Texas Intermediate: UP 0.5 percent at $75.90 per barrel
Brent North Sea Crude: UP 0.4 percent at $79.95 per barrel
burs-rl/lth
G.Lomasney--NG
