French banks slide after Macron calls surprise snap parliamentary elections

Investing.com -- Shares in some of France's biggest banks sank in early European trading on Monday after French President Emmanuel Macron called surprise snap legislative elections over the weekend.

Macron's announcement was spurred on by the results of a four-day vote for the European Parliament that resulted in a shift to the right and the election of more eurosceptic nationalists.

Among the major winners was Macron rival Marine Le Pen's far-right movement, which garnered 31.4% of the vote versus 14.6% for Macron's centrist alliance, according to European Union data on Monday morning. In a further blow to Macron, his coalition only just topped the third-place center-left, which received 13.8% of the vote.

The first round of the French parliamentary elections is now set to take place on June 30, with a run-off on July 7. These elections were initially slated for 2027.

Macron's decision has been widely seen as a major gamble. New elections could help him restore a working coalition in parliament, analysts at Bank of America Securities said in a note to clients. However, should his alliance lose control of France's parliament, he could be forced into appointing a prime minister from another party, possibly denting much of his influence on key domestic policy matters like taxation and migration.

The accelerated timeline increases uncertainty around politics, public finances and economic policy in France, and could have ramifications on French debt markets, the BofA analysts said.

"Our benign macro outlook for France was based on the assumption that political uncertainty, in particular, would remain relatively contained until the 2027 elections," the anaylsts added. "At this stage, firm conclusions on the outlook are tough, but uncertainty is up, and that is usually not a good ingredient for growth and investor sentiment."

The CAC-40 index in France slipped by 1.8% as of 04:51 ET (08:51 GMT), with major lenders Societe Generale SA (EPA:SOGN), BNP Paribas (EPA:BNPP), and Credit Agricole SA (EPA:CAGR) all falling by more than 4%.