Lecornu's Resignation Roils French Financial Markets

The unexpected resignation of French Prime Minister Sébastien Lecornu has triggered a chain reaction in the country's financial markets, leading to panic among investors and striking at the foundations of the national economy. According to Bloomberg, this sudden political development was perceived by financial circles as a signal of the deepening political crisis in the country, which inevitably led to a sharp decline in the markets.

Investors are convinced that the only way out of the current situation is to hold new snap parliamentary elections. However, this very prospect further increases uncertainty, as the election results are unpredictable, and it is unknown what economic policy the future government will pursue. It is this uncertainty that is forcing investors to get rid of French assets, preferring more stable and secure options.

The market's reaction was not long in coming. First and foremost, French government bonds were affected, with their prices dropping sharply. This indicates a decrease in investor confidence in the country's financial stability and means that it has become more expensive for the French government to borrow money.

The stock market is also in turmoil. France's main stock index, the CAC 40, which includes the shares of the country's 40 largest companies, fell by 2%. This is a significant decline for a single day. Notably, banks suffered the most significant losses, as their shares are more sensitive to political and economic instability.

The crisis has also affected the national currency. The euro weakened by 0.7% against the dollar. This is due to the fact that France is the second-largest economy in the Eurozone, and any instability there directly affects confidence in the common European currency. Thus, the political crisis in France is turning into a serious economic challenge, the consequences of which could be felt in the coming months. Moreover, the consequences could be significant not only in France.