French Stocks Plunge to Three-Month Low Amid Fears Over Budget Passage and US Tariffs
French stocks tumbled on Wednesday, hitting a more than three-month low as investors worried about the government’s ability to push through its budget. The pan-European STOXX 600 index closed 0.2% lower, with the French main stock index dropping over 1% to its lowest level since August. The technology sector was the biggest weight on the index, led by declines from French companies. French bonds also took a hit, with the premium the government must pay to borrow-long term reaching its highest level since 2012.
Investors are concerned about the fragile French government’s ability to maintain stability, with President Emmanuel Macron’s early election call failing to address ongoing issues. The government is struggling to pass its budget, with far-right leader Marine Le Pen threatening to topple the government over spending cuts and tax increases.
The ongoing uncertainty surrounding US tariffs also continues to weigh on European stocks, following US President-elect Donald Trump’s pledge to impose big tariffs on imports from major trading partners, including Mexico and China.
In other news, US consumer spending increased solidly in October, suggesting the economy maintained its strong growth in the fourth quarter. The Federal Reserve’s November meeting minutes also showed officials agreeing to avoid providing guidance on future monetary policy evolution. Meanwhile, several individual stocks, such as Johnson Matthey and Grifols, fell due to disappointing earnings reports.
