Legislative: stock market crashes, 4 sectors in chaos

The results of the European elections, but above all the dissolution of the National Assembly and the prospect of a government led by the National Assembly or the New People’s Front, sowed panic in the markets. The consequences are hard to gauge, but strategists we spoke to are concerned about the level of debt and fear of an increase in the risk premium for French stocks.

It’s not a black swan (polls predicted a record score for the National Assembly in the European elections), but it bodes ill for financial markets. The prospect of a RN-led government with the prospect of a sharp worsening of the budget deficit sent French government bond rates up and the Cac 40 down 6% over five days. The index has only shown a symbolic gain since the beginning of the year.

Knowing the program of a possible Bardell government, even if it is still too early to know whether the far-right party will be able to obtain a supermajority in the National Assembly on July 7, the declarations of some party leaders and the examination of the program of the candidate Marine Le Pen for the presidential elections in 2022 highlighted four sectors – banks, highway concessionaires, media and energy companies – causing their respective values ​​to plummet.

We believe that while we should not panic, we should reduce our positions in French stocks and be more cautious with some particularly exposed companies. In this extremely changing environment, other hypotheses are possible, such as the victory of the New People’s Front, which could also have negative consequences for the stock market, or the complete absence of a majority today, which is more likely.


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