European markets fell on Monday as escalating protests in France deepened concerns over the country’s political stability, weighing on French stocks and the euro as investors assessed the potential economic and fiscal fallout. The selloff came ahead of a busy week of corporate earnings, with results from major luxury, technology and semiconductor companies expected to provide fresh clues about the health of the European economy and global demand.
France’s CAC 40 led losses among major European benchmarks, falling as much as 1.35% during the session. The pan-European Stoxx 600 declined 0.82%, while Germany’s DAX slipped 1.1% and the UK’s FTSE 100 dropped 0.94%.
The euro weakened 0.1% against both the US dollar and the British pound as unrest over the cost of living and other issues intensified. French government bonds also came under pressure, with the 10-year bond yield reaching multi-decade highs, reflecting growing investor concerns about political uncertainty and France’s fiscal outlook.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
France Protests Weigh On Stocks, Euro
Thousands of demonstrators took to the streets across France over the weekend in protests against high living costs, inflation and declining public services. The demonstrations escalated into violence in several areas, with reports of mass arrests, property damage and looting of retail stores.
The unrest has added to pressure on President Emmanuel Macron, whose final term before the 2027 presidential election has been marked by social discontent, economic challenges and concerns over rising public debt.
Investors are watching whether the protests will translate into prolonged political instability or disrupt the government’s ability to pursue fiscal measures. Any deterioration in the country’s political outlook could make investors more cautious about holding French assets, particularly government bonds.
READ | Wall Street To Open In Green? US Futures Rebound From Tech Selloff — Top Three Reasons
The rise in French 10-year bond yields is significant because bond prices move inversely to yields. Higher yields indicate that investors are demanding greater returns to hold government debt, although movements can reflect several factors, including inflation expectations, interest rate outlooks and fiscal risks.
France’s borrowing costs and the spread between French and German government bond yields will remain important indicators of how markets assess the country’s risk premium.
Euro Under Pressure Against Dollar, Pound
The euro slipped 0.1% against both the US dollar and the British pound on Monday as investors reacted to the developments in France. The common currency has declined around 4.4% against the dollar this year and 0.9% this month, according to the supplied market data. Expectations of further US Federal Reserve rate hikes amid persistent inflation have also weighed on the euro-dollar exchange rate.
The latest weakness highlights how domestic political risks can compound broader monetary policy pressures. If uncertainty in France persists, investors could demand a higher premium for holding French assets, potentially adding to pressure on the euro.
However, the currency’s direction will also depend on developments in the US economy, expectations for Federal Reserve policy and the European Central Bank’s interest rate outlook.
European Markets Brace For Earnings Week
Alongside political developments in France, investors are preparing for a packed schedule of corporate earnings that could influence European markets.
The third-quarter reporting season has had a rocky start, with luxury group LVMH disappointing investors with its revenue performance amid concerns over demand in China.
French luxury companies EssilorLuxottica and Kering are scheduled to report results this week. Investors will look for indications of whether consumer demand is stabilising and whether weakness in China continues to weigh on luxury spending.
Technology stocks will also be in focus, with enterprise software company SAP and semiconductor equipment maker BE Semiconductor due to report. Their results could offer insights into corporate technology spending and the outlook for the semiconductor industry following last week’s global technology selloff.
Beyond Europe, investors will watch Meta Platforms’ third-quarter results on Wednesday for clues about spending by major technology companies on artificial intelligence infrastructure. Commentary on capital expenditure from the major AI hyperscalers could influence global technology valuations and risk appetite.
Oil prices slipped after US President Donald Trump issued an executive order waiving certain sanctions and tariffs under the Lindsey Graham Act relating to Russian energy transactions. The move added another factor for investors assessing the global energy supply outlook.
Elsewhere, Asian markets delivered a mixed performance. South Korea’s Kospi rose 1.76%, while Australia’s S&P/ASX 200 gained 0.44%. Japan’s Nikkei 225 closed 0.62% lower, while mainland China’s CSI 300 ended little changed at 4,174.53.
Essential Business Intelligence,
Sharp Market Insights,
Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
