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- Demonstrations over the weekend send shockwaves through European financial markets, causing a ripple effect that drives down German, French, Italian and UK benchmark indexes amid widespread losses for major banking and insurance conglomerates
By Bahattin Gonultas and Emir Yildirim
BERLIN / ISTANBUL (AA) - Massive protests in France over the weekend hit European markets hard, triggering a broad sell-off across major indexes.
Germany’s DAX 40 dropped 1.36% to 25,274 points at 4 pm local time as markets responded to the growing demonstrations in neighboring France, which is seeing some of its most serious political unrest in recent years.
France’s benchmark CAC 40 traded down 1.56% at 7,832 points at the same time.
Currency markets also reflected the financial sector’s anxiety as the euro depreciated by 0.12% against the US dollar to $1.1230.
Beyond the eurozone, the UK’s FTSE 100 fell 1.29% to 10,741.51 points at the same time.
As one of the countries whose markets are highly sensitive to shifts in the European political climate, Italy saw its FTSE MIB 30 drop sharply by 1.77% to 48,970.4 points.
Government bonds came under intense pressure due to the events in France, which have also heightened political uncertainty ahead of the 2027 presidential election.
Major financial institutions suffered, with shares of leading banks BNP Paribas, Societe Generale and Credit Agricole dropping between 2% and 2.5%.
The insurance sector was also hit as France’s largest insurance group, AXA SA, lost nearly 2% in value, dropping to €42.2 ($47.4) per share.
The wave was also felt in Spain, where upcoming snap elections next month contributed to a 1.8% drop in its IBEX 35, bringing it down to 18,978.
Defense firms and major banking institutions were among the most affected groups across the continent, as investors took a cautious stance.
All eyes turned to the earnings reports later this week from multinational corporations, including SAP, Barclays and Nokia.
Francesco Pesole, a foreign exchange strategist at ING Group, recently said the sustained protests in France will continue pressuring local corporate stocks and limit the euro’s potential rebound against the US dollar.
While the exchange rate dipped below 1.120 overnight, the euro/dollar parity showed signs of a slight recovery this morning.
Pesole noted that the euro is currently undervalued against the US dollar by 1.3%-1.5%, which aligns with France’s fiscal risks remaining firmly in the market, further reflected in the French-German 10-year government bond yield spread hovering around 140 basis points.
Investors will be on the lookout for Germany’s ZEW economic sentiment data to be released on Tuesday.
Bahattin Gönültaş
