The euro fell to its lowest level since May 2 following the results of the European elections that took place on Sunday. In the next European Parliament, there will be a shift to the right in terms of seats, with the European People's Party, led by current European Commission President Ursula von der Leyen, in the lead, but with greater representation of Eurosceptic populists.
The result may be interpreted as a new scenario of greater uncertainty, which investors hate. Hence the decline in major stock indices, the rise in bond interest rates, and the euro's loss of strength against the US dollar.
At around 12:30 pm in mainland Portugal, the European single currency had lost around 0.4% compared to its price on Friday, before the election, where it is now trading at $1.0736. The euro had already lost some strength against the US dollar on Friday, after data on the US labor market revealed that the economy created more jobs in May than analysts expected.
The victory of the far right in France, and the gains of populism in important economies such as Germany and Italy, do not seem to have helped European stock markets, which opened lower in the morning, at the beginning of a new week.
At around 2pm on Monday, the French CAC 40 index was losing the most compared to the last price, with a decline of 1.61%, appearing to reflect a certain anxiety about the post-election scenario, which led to President Emmanuel Macron. To call for early legislative elections.
Share prices of French banks on the stock market were among the most affected: BNP Paribas SA and Société Générale SA fell by more than 8%.
The German DAX index fell 0.5% compared to Friday at the same time, while the Spanish IBEX also lost 0.4%. Although no longer part of the European Union, the UK also saw a small loss in its main index on the London Stock Exchange, with the FTSE falling by around 0.3% at the same time.
In the Portuguese case, the PSI followed the European panorama, continuing to lose 0.23% compared to the previous session. The day had started much worse, with a decline of about 0.6% in the morning. This is despite the fact that the electoral results in Portugal left the so-called “moderate” parties in the lead, with a slight victory for the Socialist Party over the PSD/CDS-PP coalition and the Liberals tied in the number of elected representatives with Chiga. .
Fear of further conflict in the next European Parliament, with the rise of Eurosceptic populists, also appears to be reflected in bond behaviour. At around 9 a.m., the difference in performance (fruit) of bonds issued by the governments of France and Italy in light of fruit German bonds rose by six and eight basis points, respectively.
This difference in yield is an indicator of the risk premium that investors want to maintain when purchasing bonds issued by a particular government. If the distance increases, it means that investors consider these bonds to be riskier.
And Germany itself, where the far-right Alternative for Germany party came in second place (15.9%), surpassing the Social Democratic Party (13.9%), which is owned by current Chancellor Olaf Schulz, and obtained its share of the votes. fruit By five basis points to 2.67%.
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