The European values ​​markets retired on Tuesday, demolished by French actions when merchants monitored the potential for the government to lose a vote of trust next month.
The France CAC 40 index collapsed more than 2% in the first agreements before reducing losses to around 1.6% at the end of the negotiation session. The three main opposition parties in the country said they would not support a vote of surprise confidence called by Prime Minister Francois Bayrou on Monday for September 8 about their budget plans.
Bayrou argues that around 44 billion euros ($ 51 billion) are needed in budget cuts to reduce the French deficit, which totaled 5.8% of GDP in 2024, with its proposals that include welfare spending, pensions and tax supports.
Erik Nelson, head of the G10 FX strategy in Wells Fargo, described the perspective of “non -great” French assets, but said that the result of the Bayroun government was not an inevitable conclusion.
“I think part of the problem here is that European actions, the euro itself, have been a very popular impulse trade throughout the year. What we are seeing in recent days has been a bit relaxed.”
CAC 40 index.
“I don’t know if Bayrou is definitely out. There is still some uncertainty there. He has many things he can offer to the opposition,” Nelson continued, including that the French minister could move away from a controversial proposal to cut two holidays.
“They are walking a very fine line here, and … given where market positioning is in European assets, there are many risks.”
Fed drama
European markets in general were also lower, since world investors monitored the last attempt to intervention by the president of the United States, Donald Trump, in the operation of the Federal Reserve.
The United Kingdom Ftse 100 and that of Germany Dax 0.7% and 0.4% fell, respectively.
Trump’s announcement on social networks that had fired the governor of the Board of the Federal Reserve, Lisa Cook, led to the lowest Asia-Pacific markets during the night. Cook said in a Monday statement that Trump did not have the authority to eliminate it and that “he will not resign”, leaving a legal dispute a possible potential step.
