European Stocks Near One-Month Highs Amid French Political Developments

European equities remained steady on Thursday, approaching one-month highs, as French markets absorbed the political upheaval following a no-confidence vote that ousted Prime Minister Michel Barnier’s government.

Market Highlights

• STOXX 600: Rose 0.1%, marking its sixth consecutive session of gains.
• France’s CAC 40: Mirrored regional trends with a 0.1% uptick.

French Political Impact

• Prime Minister’s Ouster: Michel Barnier’s anticipated resignation would make him the shortest-serving prime minister in modern French history. Despite the instability, French constitutional provisions are expected to avert a government shutdown, maintaining investor confidence.
• Banking Sector Surge: Major French banks—BNP Paribas, Societe Generale, and Credit Agricole—saw gains between 1.2% and 2%, buoyed by optimism that fiscal continuity will be maintained.

Sector Movements

• Safran Decline: The French jet engine maker’s shares dropped 4.6% after revising its financial targets, weighing on the industrial sector.
• Energy Sector Boost: TotalEnergies gained 1% following an upgrade to “outperform” by RBC, contributing to overall market resilience.

The broader European market’s steady performance reflects investor resilience amid political uncertainty in France. While Barnier’s ouster raises concerns about governance and the 2025 budget, the market response suggests confidence in constitutional safeguards and economic stability.

Sector-specific developments, such as upgrades in energy stocks and banking optimism, underscore the market’s focus on fundamentals over short-term political risks. Investors will likely monitor further developments in France and Safran’s financial adjustments while assessing the broader European economic outlook.