Everything is turned upside down in France. President Emmanuel Macron announced the dissolution of the National Assembly and called for early elections. The country's stock market failed to cope with the situation, and the national CAC 40 index slumped by 6%.
Notably, the French index includes the 40 largest companies listed on the Euronext Paris exchange. Last week, this indicator suffered a significant drop of over 6%, marking its biggest decline in two years. As a result, the capitalization of the French stock market tumbled to $3.17 trillion, below the British market's $3.23 trillion. Experts attribute this sharp fall to President Macron's decision to dissolve the National Assembly and schedule new elections for June 30 and July 7. The French leader made this move after his party, Renaissance, failed in the European Parliament vote. According to Goldman Sachs, the country's stock market collapse will continue if the National Rally party, led by Marine Le Pen, wins. This would hit most bank stocks, construction sector shares, and French and European defense companies. The most likely outcome is that no party secures a majority. In this case, France's debt-to-GDP ratio will worsen because of the difficulties in enforcing spending limits needed to reduce the state deficit and implement structural reforms.