(MENAFN- Matrix PR) Report by Mohamed Hashad, Chief Market Strategist, Noor Capital
The French legislative elections drew mixed reactions from European fundamentalists, despite the fact that the results suggested the far right would not win power and therefore lower the risks associated with the political trend’s renowned economic ideas.
By the end of the new trading week’s first day, the euro was up because of the French election results, which showed that the Economy was beginning to break free from the extreme right’s hold.
The far right, which had won the first round, was content with third place, while the leftist coalition defeated President Emmanuel Macron’s “Together” movement. The poll did not yield an outright majority for any bloc in the National Assembly, although the Left Alliance declared itself prepared to govern.
From the previous daily close of 1.0837, the EUR/USD pair increased to 1.0825. On the first trading day of the new week, the pair’s lowest level was 1.0803, while its highest level was 1.0845.
Political stability
After the results of the early French legislative elections showed that the far-right coalition in the nation finished third, ahead of President Macron’s coalition and the left-wing New Popular Front coalition, Gabriel Attal, the prime minister of France, announced on Sunday that he would resign on Monday morning.
The Prime Minister emphasized that he had forewarned of the danger of an absolute majority for either party, saying, “The election results confirm that we have avoided the danger of an absolute majority for the far left or the right.”
it is worth noting that President Emmanuel Macron called for early elections after his political coalition lost the elections for the European Parliament, and the French president declared on Sunday that it will honor the people’s decision in the parliamentary elections.
The French president would postpone making critical decisions until the complete picture of the parliamentary election results is known, the presidency confirmed.
According to analysts, the far right came in third place, while the left-wing New Popular Front coalition led the results of the French legislative elections. President Macron’s coalition, Together, came in second.
The far-right National Rally party’s defeat appears to have had a favorable impact on the French presidency, as evidenced by the response it garnered from international financial markets. One of the things that caused the markets to become very happy with the results was the president’s remarks, since the institution’s positive assessment of the outcomes increased hopes that France would have political stability.
Unsurprisingly, this resulted in heightened risk appetite, a consistent factor in gold’s fluctuations. By the end of Monday’s trade, gold had dropped by roughly 1.5%. When the US dollar attempted to rally on Monday, spot gold contracts saw a steep decline. This was most likely due to the breathing room the results of the early French legislative elections gave the markets after the extreme right was spared from controlling the second-largest economy in the euro zone.
In contrast to the conclusion of the previous session, which was $2,391 per ounce, gold contracts dropped to $2,351 per ounce. Against the lowest recorded level of $2,351, the precious metal reached its maximum level of the current trading day at $2,391.
European, French stocks
Because of the lack of clarity in the political scene regarding the future path of the government coalition that has not yet been formed, the results of the French elections did not have the same positive impact on European stocks as they did on the euro.
Additionally, worries have surfaced regarding the potential for the National Rally Party to become a vehicle for the extreme right in France in the future. Analysts have stated that France seems to be facing the political unknown as a result of the party’s ability to enter the new National Assembly with strength and a big number of members unparalleled in its history despite losing these elections.
For the foreseeable future, the performance of French equities, and European markets generally, may be surrounded by uncertainty about the French political landscape. With the revelation of information about the government coalition and its creation, political unrest should eventually subside.
Of the European stock market indices, the Spanish-focused IBEX 35, the German DAX 30, the British FTSE 100, the German DAX 30, the French Stock Exchange CAC4, and the Stoxx Europe 600 Composite for European equities all had declines of roughly 0.1%, 0.2%, 0.1%, 0.1%, 0.7%, and 0.1%, respectively.
After gaining roughly 60 points, or 0.2%, the Italian FTSE Milano index continued its upward trend and closed Monday’s trading at 34,046 points.
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