Following the European elections, the Dax temporarily fell to its lowest level since the beginning of May on Monday. The prospect of new elections to the National Assembly in France in particular caused uncertainty among investors and weighed on share prices. The German leading index closed 0.34 percent lower at 18,494.89 points. This enabled the Dax to limit initially higher losses in late trading. The MDax with the medium-sized stocks lost 0.45 percent to 26,741.07 points.
The pressure on prices at the start of the week came from Paris, where the leading index Cac 40 fell to its lowest level since February. Among the major European stock exchanges, the index was the biggest loser, falling 1.4 percent. French government bonds were also sold, falling to their lowest level since November 2023.
After the crushing defeat of his centrist camp in the European elections, President Emmanuel Macron is taking the plunge. With the new election of the National Assembly, the liberal wants to create clear political conditions and probably hopes to expand his majority in the parliamentary chamber.
“A risky bet,” says analyst Jim Reid of Deutsche Bank. Macron could also bet that the right-wing nationalist Rassemblement Nationale (RN) around Marine Le Pen will lose some of its appeal after the new elections with a stronger participation in government in the period up to the 2027 presidential election.
Analyst Berndt Fernow from Landesbank Baden-Württemberg spoke of a “bombshell in Paris”. If the RN takes over domestic and economic policy after the parliamentary election, then it could quickly lead to “a swearing-in on the financial markets too”. Because the right-wing populists around Le Pen could then want to lower the retirement age in France again, as promised.
On the German stock market, prices in the energy sector suffered on Monday due to political uncertainty, as the poor performance of the traffic light coalition in Germany caused a stir. The Greens, as supporters of the German energy transition, suffered significant defeats in the European elections on Sunday.
Shares of wind turbine manufacturer Nordex and solar specialist SMA Solar fell by 2.6 and 1.9 percent respectively. The DAX group RWE also felt the impact, with a drop of 1.7 percent.
On the corporate side, there was little activity on Monday morning. A buy recommendation from Deutsche Bank gave Cancom shares a strong boost – by 5.5 percent.
Porsche AG shares closed 1.78 euros or 2.4 percent lower. This was due to the dividend discount of 2.31 euros per share.
The EuroStoxx 50, the leading index for the Eurozone, fell by 0.69 percent to 5016.48 points at the start of the week. The FTSE 100 on the London Stock Exchange recorded only moderate losses.
The euro came under pressure on the foreign exchange market after the European elections and fell to 1.0742 US dollars in the evening. The European Central Bank (ECB) had set the reference rate at 1.0756 dollars in the afternoon.
On the bond market, the yield on outstanding bonds rose from 2.64 percent on Friday to 2.70 percent. The Rex bond index fell by 0.31 percent to 123.44 points. The Bund future fell by 0.40 percent to 129.67 points in the evening.
Source: Stern
