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FTSE 100 falls as France’s Macron announces snap election amid crushing poll results

The FTSE 100 started the week firmly in the red after marathon European elections ended with the announcement of a snap election by the French President who suffered crushing losses to the far-right.

There was a broad increase in support for far-right parties pushing anti-immigration agendas in the European elections, but the centre managed to hang on and retain command of the parliament.

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The elections will be a warning to incumbent European political leaders, but the actual results produced little market-moving developments. The biggest shock was Emmanuel Macron’s gamble to call snap elections in an attempt to quell the threat posed to his authority by far-right leader Marine Le Pen. Le Pen’s National Rally party received around 31% of the vote – more than double the votes Macron’s pro-European centrist party.

The snap elections in France won’t unseat Macron himself, and he will continue to be able to rule by presidential decree. The risks stem from a wider leaning towards nationalist parties across Europe that poses a threat to the European project.

This risk was evident in European stocks on Monday, and the FTSE 100 opened up sharply lower with the German DAX and French CAC. The FTSE 100 was down 0.42% at the time of writing.

“Political turmoil in Europe saw the FTSE 100 start the week on the back foot with only a handful of names on the index trading in positive territory,” said AJ Bell investment director Russ Mould.

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“An unexpectedly strong showing for far-right parties in European elections in France prompted President Emmanuel Macron to call a snap parliamentary election to be held within the next 30 days. This injects a big dose of the uncertainty which markets hate – with the euro dropping sharply in response to the developments.

“Financial stocks were among the worst performers in London as investors digested the news. Also affecting sentiment were Friday’s better-than-expected US jobs numbers which push back against the narrative that rate cuts are imminent.”

Ashtead

In stock-specific news, Ashtead opened on reports the plant hire company was exploring shifting its primary listing to the US. The move would follow in the footsteps of construction company CRH, who recently ditched London for New York, so the news isn’t a major surprise. However, it will be a major disappointment given the string returns the company has provided investors over the years.

“Ashtead is the twenty-fifth biggest company in the FTSE 100, as measured by its stock market valuation of £24.5 billion, so no-one will want to see the company switch its listing to New York, especially as the firm is just one of eighteen in the UK’s elite index that can point to a record of growing its dividend every year for at least a decade,” says Russ Mould.

“If there is any consolation for the London Stock Exchange, and investors in the UK equity market, Ashtead is unlikely to be leaving because its shares are too cheap relative to its US-quoted peers and rivals for reasons that relate directly to the business rather than optics or the share price.”

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