French elections: CAC 40 heads lower as stalemate sets in
Sunday’s French election result produced no overall winner, and the lack of any developments has put pressure on the CAC 40.
France’s parliament reassembles
France's political landscape underwent a significant shift on Tuesday as left-wing parties gathered at the National Assembly for orientation sessions. These parties emerged from the recent snap legislative elections with the largest number of seats in parliament, marking a notable change in the balance of power.
The election results split the National Assembly into three main blocs, with the leftist New Popular Front coalition taking the lead, followed by President Emmanuel Macron's Ensemble alliance, and the far-right National Rally (RN) securing the third position. This outcome was particularly striking given that the RN had led in the first round of voting.
In the wake of these surprising results, negotiations to form a new government were in full swing on Tuesday. The complex political situation has created challenges for President Macron, who now faces the task of building a workable coalition or finding ways to govern effectively without a clear majority.
Adding to the political intrigue, Macron rejected Prime Minister Gabriel Attal's resignation on Monday. Instead, the president requested Attal to remain in his position temporarily, citing the need "to ensure the country's stability" during this period of political uncertainty. This move underscores the delicate balance Macron is trying to maintain as he navigates the new parliamentary landscape and works to form a government capable of implementing his agenda.
CAC 40 hits one-week low
French markets had made some gains on Monday as the first day of trading after the elections began, but since then they have fallen back.
The main French index, the CAC 40, has slipped back below the 200-day simple moving average (SMA), currently at 7652, and may now head back to the June lows around 7470.
A close below this takes us on to the January low at 7300. Bulls will want to see a close back above the 200-day SMA and then back above last week’s highs around 7720.
CAC 40 chart
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