French Stocks Plunge as Prime Minister Sebastien Lecornu Resigns After Just Weeks in Office

French markets opened sharply lower on Monday after Prime Minister Sebastien Lecornu unexpectedly resigned less than a month into his tenure, deepening France’s ongoing political uncertainty. The announcement shocked investors and rattled confidence in Europe’s second-largest economy, triggering a sell-off across Paris-listed equities and pressuring the euro.

The CAC 40 index tumbled 2% shortly after trading began, erasing much of last week’s gains when the benchmark hit record highs. Analysts say Lecornu’s resignation, coming so soon after François Bayrou’s government collapsed over budget disputes, adds to fears of prolonged instability and raises the prospect of early elections. The pan-European Stoxx 600 slipped 0.4% around mid-morning in London, ending its five-day winning streak.

French banks bore the brunt of the sell-off, with Societe Generale, BNP Paribas, and Credit Agricole all plunging more than 5%. Bond markets also reacted nervously, as the yield on France’s 10-year benchmark bond rose to 3.6%, its highest level in ten days. Meanwhile, the euro weakened by 0.7% to trade near $1.1658 against the dollar, reflecting growing investor caution over France’s political future.

The turmoil extended beyond politics, with Aston Martin shares sliding nearly 10% after the luxury automaker issued a profit warning citing tariff pressures. French carmaker Renault also lost over 1% following reports it plans to cut 3,000 jobs in non-manufacturing divisions. However, not all European stocks suffered, Stellantis gained 2.1% after reports surfaced that it plans a $10 billion expansion in the U.S., helping lift the region’s autos index by 0.4%.

Globally, investors remained cautious but largely resilient. U.S. futures were flat despite the ongoing government shutdown that has delayed key economic reports. Over in Asia, Japan’s Nikkei 225 soared more than 4% after Sanae Takaichi was elected as the ruling party’s leader, setting her on course to become the country’s first female prime minister. Meanwhile, Europe’s focus remains squarely on France, where Lecornu’s resignation has thrown markets into renewed uncertainty and reignited debate about the country’s fiscal and political direction.

source: cnbc