Britain has re-taken the crown of being home to Europe’s biggest stock market after political turmoil in France knocked billions of euros off the market in a matter of days.
Paris has ruled the roost for past 18 months after knocking London from the top spot, but after President Macron announced a shock snap election the top index in France has been plummeting.
In March last year, the market cap in Paris was ahead of London by nearly £200 billion, but the Gallic dominance has proved to be short-lived with the City once again taking the lead.
According to data compiled by Bloomberg, stocks in the country are now collectively worth about 3.13 trillion US dollars (£2.47 trillion), fractionally behind the UK’s collective 3.18 trillion US dollars (£2.51 trillion).
Paris’s top index, the CAC 40, shed more than six percent of its value last week in one of the worst weeks of trading for more than two decades.
President Emmanuel Macron dissolved France’s National Assembly, parliament’s lower house, in a shock response to a humbling defeat by the far-right in European elections on June 9.
Elections with two rounds of voting will now take place on June 30 and July 7, a few weeks before the Paris Olympics.
A group of analysts at Deutsche Bank said the sell-off in French markets was its largest weekly decline since March 2022 and, other than during the early Covid period, « you would have to go back to the aftermath of 9/11 in 2001 to see such extremes ».
The analysts said: « In turn, this more than wiped out all its gains year-to-date, leaving the index down 0.53% on the year.
« Suffice to say that this uncertainty will be with us until at least the second round of the election on July 7 and likely beyond, » Deutsche Bank’s analysts predicted.
« The polls haven’t narrowed in Macron’s favour in the first week of the campaign with the far-right and left outpacing the president’s centrist party. »
Intense political in-fighting among parties in France has stoked concerns about what the country’s future holds, with it facing snap parliamentary elections at the end of the month which could see President Emmanuel Macron pushed out.
Meanwhile, London’s FTSE 100 has had a strong 2024 so far, hitting new all-time highs thanks to improved investor confidence.
Some analysts said that, in contrast to France, the UK is facing less uncertainty over its forthcoming General Election, which has helped calm the financial markets.
Opinion polls continue to show Sir Keir Starmer’s Labour Party taking the lead and Prime Minister Rishi Sunak’s Conservatives suffering a defeat.
Susannah Streeter, head of money and markets for Hargreaves Lansdown, said: « In the UK, comments by shadow chancellor Rachel Reeves will also buoy hopes that there could be slightly closer trade ties between the UK and the EU under a Labour administration and less of a focus on regulatory divergence.
« Labour says it’s focused on stimulating long-term growth to revive the sluggish economy. »
