LONDON – European stocks were higher in early trade on Monday as markets reacted to expectations of a hung parliament following a surprise victory for France’s left-wing coalition.
As of 8:35 a.m. London time (3:35 a.m. ET), France’s CAC 40 index had recovered from earlier losses and was up 0.2%. this EUR It was flat against the dollar.
British FTSE 100 stable, while germany German DAX Index and FTSE MIB Both were up about 0.3%. Pan-European Stoke 600 up 0.23%.
France’s left-wing New Popular Front won the most seats in this weekend’s parliamentary election, defying an expected surge on the far right. However, early data showed the coalition failed to secure an outright majority, leaving markets pricing in the possibility of a hung parliament.
François Digard, head of French equity research at Kepler Cheuvreux, said a hung parliament was what the market was expecting.
“As expected, there was a hung parliament, so last week, the market was already showing that… just expecting it to be more to the right, but it ended up being to the left,” he told CNBC on Monday.
Deutsche Bank strategists added that markets will be skeptical of the new Popular Front’s “fiscally aggressive” spending and tax plans.
“Last night, the far left was already talking about wealth taxes and increases in corporate taxes, which would be unfriendly to markets. However, this morning, trying to create a government with any stability looks like a very high bar. Political paralysis for the next 12 months Month appears to be the most likely outcome,” they added.
The UK held a general election last week in which the opposition Labor Party won a landslide victory, replacing the Conservative Party after 14 years in power.
In corporate news, soft drinks maker Britvic has agreed to a £3.3 billion ($4.2 billion) takeover bid from Carlsberg for 1,290 pence per Britvic share. This is an improved offer from Carlsberg, which originally proposed 1,200 pence per share but was rejected.
There were no major corporate earnings releases on Monday. It’s also quiet on the data front, with German trade data due soon.
Asia-Pacific stock markets were mixed on Monday. In the U.S., futures were lower as investors looked to inflation data for hints on the market’s rebound this year and the Fed’s next move. June consumer price index data will be released on Thursday and producer price index data will be released on Friday.
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