European stocks slumped as investors worried about the potential impact of rising political risk in France.
The Stoxx Europe 600 Index slipped 1.3% by 3:34 p.m. in London. France’s CAC 40 Index sank 2%. The country’s bonds also declined, driving yields over safer German peers to the highest level in seven years amid concerns that Marine Le Pen’s far-right National Rally party will usher in looser fiscal policies if it wins upcoming legislative elections.
The French equity benchmark is down about 3.6% since Monday and is heading for its worst week in a year following President Emmanuel Macron’s decision to call a parliamentary vote.
Automakers slid as the European Union announced that it will impose tariffs of as much as 48% on electric-vehicle imports from China. The chemicals sector also underperformed.
Among individual stocks, Wise Plc sank by the most on record after the fintech firm’s outlook for revenue growth disappointed. Novo Nordisk A/S was subdued after a newspaper report said Denmark was telling doctors that the company’s weight-loss drug Wegovy should be used to a lesser extent.
European stocks have made only modest gains in June, even as investors bet on central bank policy easing this year. The European Central Bank cut rates this month, although the Fed signaled on Wednesday that it expects to lower borrowing costs only once in 2024 instead of the three reductions penciled in previously.
That hawkish indication is weighing on investor sentiment Thursday, Liberum strategist Joachim Klement said. “However, investors should not forget that inflation in Europe and the UK is lower than in the US. This should give European market the necessary support to continue their 2024 rally and overcome the soft spot of recent weeks,” he said.
The UK’s FTSE 100 dropped 0.7%. Labour Leader Keir Starmer set out his party’s plan for government, focused on economic growth and security, a crunch moment for Britain’s would-be prime minister ahead of the general election on July 4.
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With assistance from Michael Msika.
This article was generated from an automated news agency feed without modifications to text.
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Published: 13 Jun 2024, 11:17 PM IST