France’s financial markets came under pressure on Monday following the resignation of Prime Minister Sébastien Lecornu, as political uncertainty pushed up borrowing costs and weighed heavily on bank shares.
The benchmark CAC 40 index fell 1.5 percent at around 10:25 a.m. GMT, after dropping more than two percent earlier in the session. The yield on 10-year French government bonds briefly surged to 3.61 percent before easing to 3.57 percent, up from 3.51 percent in the previous trading session.
Market analyst Alexandre Baradez of IG France attributed the selloff to investor unease over Lecornu’s resignation. “With the rise of 10-year yields, investors are readjusting their risk,” he said.
Shares in major French banks plunged amid the volatility — BNP Paribas fell over four percent, Société Générale declined by more than five percent, and Crédit Agricole shed over four percent.
Antoine Andreani, head of research at XTB France, warned that crossing the 3.60 percent yield threshold could expose French debt to “massive attacks,” heightening market anxiety.
The spread between French and German 10-year bonds — a key measure of credit risk — widened to 89 basis points, its highest level in nine months.
Analysts said the political upheaval could have broader implications for France’s fiscal policy. “Lecornu’s resignation has plunged the political arena into uncertainty. Investors fear a domino effect on economic and fiscal policy,” Andreani noted.
Lecornu, appointed just last month by President Emmanuel Macron, held the shortest tenure of any French prime minister in modern history. His resignation follows fierce backlash over a proposed austerity budget and the unveiling of an almost unchanged cabinet, which drew criticism from across the political spectrum.
