European stock markets rise after elections in France

On European stock exchanges on Monday morning, stock prices rose, especially on the Paris exchange, as the outcome of the first round of parliamentary elections in France was not as bad as investors feared.

STOXX 600 index of leading European stocks was up 1 percent at 9:30 AM, after falling for four consecutive days. Meanwhile, the London FTSE index strengthened by 0.60 percent to 8,215 points, while the Frankfurt DAX rose by 0.98 percent to 18,415 points, and the Paris CAC increased by 2.78 percent to 7,687 points. Today’s jump in the CAC index has compensated for all losses from last week when it fell nearly 2 percent and plunged to its lowest level in five months.

The results of the parliamentary elections in France provided support to the markets. Although the far-right National Rally (RN) party of Marine Le Pen gained a relative majority in the first round of elections on Sunday, it was with a smaller lead than some polls suggested. The RN received 33 percent of the votes, the left bloc 28, and the centrists of President Emmanuel Macron 20 percent. However, the final results will depend on negotiations ahead of the second round of elections on July 7, and it is believed that the RN will not be able to secure an absolute majority.

As a result, the stock prices of French banks BNP Paribas, Societe Generale, and Credit Agricole rose the most this morning – between 4.8 and 8 percent.

Asian markets slightly rose

On most Asian exchanges, stock prices also increased. MSCI Asia-Pacific index, excluding Japan, was up 0.3 percent at 9:30 AM, after rising about 7 percent in the first half of the year.

This morning, the Japanese Nikkei index strengthened by 0.1 percent, while in South Korea and Shanghai, stock prices rose between 0.2 and 0.9 percent. In Australia, however, they slipped by 0.2 percent, while in Hong Kong, there is no trading due to the holiday.

Investors were cautious due to revised data showing that Japan’s gross domestic product (GDP) fell by 2.9 percent year-on-year in the first quarter, not 1.8 percent as previously estimated. Additionally, growth data for the previous two quarters were revised downwards.

No better data came from China either. An official report showed that the PMI index of manufacturing activity in June was 49.5 points, the same as a month earlier, indicating a weakening of production for the second consecutive month. However, a private report from Caixin/S&P Global showed that the PMI index of manufacturing activity in June rose from the previous 51.7 to 51.8 points, representing the highest level of this index in three years.