LIVE MARKETS-French political turmoil largely baked into stocks

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FRENCH POLITICAL TURMOIL LARGELY BAKED INTO STOCKS

French stocks are expected to hold firm following the vote of no-confidence in the French lower house of parliament later on Monday, which Prime Minister Francois Bayrou is set to lose.

"The reason why we don't see a very aggressive market reaction is that the political risk in France has mounted since last year," Ipek Ozkardeskaya, analyst at Swissquote bank, says.

Ozkardeskaya said for markets, it was a matter of the same uncertainty that started last year when President Emmanuel Macron called a snap election.

The French blue-chip index CAC 40 .FCHI has stalled since the start of September, following a 3% fall in the last week of August. Year-to-date, the index is up 4%, making it one of the weakest performing domestic indices in Europe. Athens' ATG .ATG and Madrid's IBEX .IBEX are the standouts so far, with year-to-date gains of 37% and 28%, respectively, while the STOXX 600 .STOXX is up 8.2% in 2025.

"The vast majority of firms in the market generate a decent chunk, if not all, of their revenues overseas. So actually, exposure to the domestic political backdrop is somewhat more limited than, for example, if you were looking at the DAX or U.S. market," Michael Brown, analyst at Pepperstone, says

"French assets are going to carry a risk premium compared to their developed market peers, so long as this political instability continues," he adds.

(Tristan Veyet)

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