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European markets hit by election turmoil

The French CAC 40 stock index dropped to its lowest level since February, dragging down indices across the continent

European Union flag flying outside the Bourse in Brussels, Belgium © Getty Images / sharrocks

European stocks slid on Monday as traders reacted to initial results from the EU Parliament elections and the surprise decision by French President to call a snap election.

On Monday, ’s CAC 40 stock index dropped 2% to its lowest since February, after Macron announced on Sunday that he was dissolving the National Assembly, the lower house of the French parliament, and calling a snap general election. The country’s banks and utilities have been hit particularly hard, with Societe Generale and BNP Paribas shares plummeting 7.8% and 4.7%, respectively.

The pan-European Stoxx 600 index was down 0.4%, with construction stocks leading the losses, falling 1.5%.

The euro slipped 0.6% to a one-month low of $1.0733 and 0.4% against the British pound in the wake of the news.

In France, the right-wing National Rally, previously led by Le Pen, received more than 30% of the vote, while Macron’s Renaissance party only managed around 15%, prompting his shock call for a general election.

Susannah Streeter, head of money and markets at stockbroker Hargreaves Lansdown, told the AFP.

READ MORE: Le Pen ‘ready to exercise power’ after Macron party trounced

she said.

Scope Markets analyst Joshua Mahony told the outlet that it was “no surprise” to see weakness across French stocks amid increased uncertainty.

France will go to the polls for a new National Assembly on June 30, with a second round on July 7.

In Germany, Chancellor ’s centrist party had its worst ever result with 14% of the vote, according to projections. Meanwhile, the right-wing Alternative for Germany (AfD) is expected to finish second with an estimated 15% of the vote, trailing the center-right CDU/CSU alliance, which is estimated to have won around 30%. Germany’s DAX dropped 1% on Monday in light of the news.

Right wing parties also won in Italy and Austria.

Source

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