UK Overtakes France as Europe’s Largest Stock Market
The United Kingdom has overtaken France to become Europe's largest stock exchange following Emmanuel Macron's surprise decision to call a snap election, which has caused significant turmoil in the financial markets. According to data compiled by Bloomberg, Britain's collective stock market valuation now stands at $3.18 trillion (£2.51 trillion), surpassing France's $3.13 trillion (£2.47 trillion).
French markets plunge amid election uncertainty
The Cac 40 stock index in Paris experienced its most severe weekly decline since 2002 following the unexpected announcement of parliamentary elections in France. The index has wiped out all gains made earlier this year, plunging after reaching record highs just a month ago. Shares of major French banks such as BNP Paribas and Credit Agricole plummeted by more than 10%, reflecting investor concerns as both banks hold significant amounts of French bonds, which suffered a sharp sell-off.
Rising government borrowing costs
The political uncertainty in France has led to a spike in the government's borrowing costs, with interest rates on French 10-year bonds reaching levels not seen since Portugal two decades ago. This development underscores the heightened financial instability and investor unease surrounding the election period.
Market volatility and investor sentiment
Alberto Tocchio, portfolio manager at Kairos Partners, commented on the current market climate, expressing concerns over the lack of certainty in the coming weeks and the potential for increased market volatility. Investors are navigating through a period of heightened instability as they assess the implications of the upcoming elections on economic policies and market conditions.
UK FTSE 100 Hits Record Highs
In contrast to the turbulence in France, the FTSE 100 index in the UK has reached record highs this year. Investors have relatively lower valuations in the UK market and have responded positively to new stock market listings, such as Raspberry Pi, which debuted last week.
