Legislative elections in France: information from Monday 8 July

The Swiss stock market started in the red on Monday morning, not reassured by the surprise victory of a left-wing coalition in a legislative election in France. Speakers are concerned about the risk of political deadlock in parliament, which lacks an absolute majority, if the far-right National Rally’s government is averted.

Other European markets also moved into the red, notably Paris (CAC 40 -0.59%), London (FTSE 100 -0.29%) and Frankfurt (DAX -0.11%).

French voters sprung a surprise in the second round of last Sunday’s legislative elections, making the left-wing coalition of the New Popular Front the leading political force in the National Assembly with 182 seats, followed by the Macronist Group party (168 seats). . Although the National Rally was declared victorious after the first round of voting at the end of June, it finished third (143 seats).

With this score, none of the three political forces could reach the mere 289 delegates required for an absolute majority. Outgoing Prime Minister Gabriel Atal is expected to submit his resignation letter to President Emmanuel Macron in the morning, even though he has said he is willing to stay in Matignon “as long as duty requires.” Mr Macron’s appointment is eagerly awaited as he is the prime minister appointee.

“Least Worst Case”

The process could take a long time, pending a hypothetical agreement between several political forces on the Matignon candidate and a plan. Unless he chooses a technocratic government on the Italian model or his outgoing team to handle current affairs in the short term.

“The situation of political deadlock in France, with a legislature divided into three blocs (left – center – right), elected by the French,” summed up Mirabaud Bank expert John Plassard, rating it as “low”. Worst case”.

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“If the financial markets should initially be relieved that the extremes have not won an absolute majority in the National Assembly, then volatility will increase a step further,” said Mr. Plassard said in a statement.

“A legislature divided into several constituencies, with none of them having a clear majority, makes it difficult to form a government and take important decisions. “No major reforms are expected to emerge in the next three years, which means that rating agencies (with Moody’s leading the way) will quickly revise their ratings for France,” he concluded.

At 9:06 a.m. on the Swiss stock market, the SMI was down 0.13% at 11,988.20 points, down 0.52% on Friday evening.

In the virtual absence of corporate news, only a minority of star stocks opened higher, with insurers Swiss Life (+0.8%) and Swiss Re (+0.6%), as well as Santos (+0.6%).

The biggest declines were reported by Kühne+Nagel (-1.8%) and luxury stocks Swatch Group (-1.5%) and Richemont (-1.2%).

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