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People gather to celebrate the victory of the left-wing trade union after the partial results of the second round of the French parliamentary elections in Paris, France, on July 7, 2024.
Luc Auffret | Anadolu | Getty Images
LONDON — European stocks closed lower on Tuesday as investors in the region assessed political uncertainty in France following the outcome of Sunday’s election.
The pan-European Stoxx 600 The index provisionally closed the day down 0.99%. Retail stocks led losses, falling 1.65%.
European markets
| .FTSE | FTSE 100 Index | 8,139.81 | -53.68 | -0.66% |
| .GDAXI | DAX | 18,236.19 | -235.86 | -1.28% |
| .FCHI | CAC 40 Index | 7,508.66 | -118.79 | -1.56% |
| .FTMIB | FTSE MIB | 33,864.47 | -182.07 | -0.53% |
| .IBEX | IBEX 35 Idx | 10,898.80 | -123.30 | -1.12% |
The United Kingdom FTSE 100 Index fell into the red in afternoon trading after bucking the broader negative trend during the morning. It follows last week’s emphatic victory for the centre-left Labour Party, seen as broadly supportive of UK assets and sectors, including home builders in particular.
Paris CAC40 The index, in turn, ended the day down 1.81%, with investors continuing to evaluate the implications of a hung parliament and a potential prolonged period of political uncertainty in France.
To the left New Popular Front won the largest number of seats in the final round of voting, sabotaging an expected surge for the far right. The alliance failed to secure an outright majority, however, meaning a coalition or technocratic government is on the cards, making legislation and reforms harder to pass.
Credit markets have pushed French risk prices back to roughly half of pre-election levels, according to Bryn Jones, head of fixed income at Rathbones.
“It’s a wait-and-see trade, and the market has told you that … your spread is completely midway between the worst it’s been and the best it’s been in the last few weeks,” Jones told CNBC’s “Squawk Box Europe.”