Emmanuel Macron’s election gamble has caused France to lose its crown as Europe’s biggest stock market, with London overtaking it to retake the title after spending most of the last two years in second place.
France’s stock market is now worth a combined $3.13tn (£2.47tn), while the UK sits at roughly $3.18tn (£2.51tn), according to a Bloomberg index. The UK is now the sixth-largest stock market globally.
Last week, France’s listed companies lost some $258bn (£204bn) in total market capitalisation after its president called a shock snap election, with fears that the country’s far-right National Rally party, led by Marine Le Pen, could seize power.
France’s CAC 40 blue-chip index had its worst week since 2002 and has now wiped out all its gains made so far this year despite reaching record highs just last month.
Big banks holding large amounts of French government debt, including Societe Generale, BNP Paribas, and Credit Agricole, were among the hardest-hit stocks.
“We are in a period where there are no certainties for three to four weeks and the market could unfortunately become more unstable,” said Alberto Tocchio, portfolio manager at Kairos Partners.
Despite faltering in recent weeks, the UK’s FTSE 100 hit several record highs last month amid falling inflation, looming interest rate cuts and a more positive outlook for the economy.
Investors have been attracted by London’s relatively cheap valuations compared to other financial centres, which has also spurred a pickup in M&A activity – with a slew of takeover deals agreed in recent months. Raspberry Pi’s big-ticket IPO last week has further buoyed investors.
While Britons also face an election this summer, on 4 July, the predicted outcome is more stable than France. Keir Starmer’s Labour party is widely expected to achieve a majority, according to polls.
Voting for France’s two-round election is scheduled for 30 June and 7 July.