French stocks plunge after Prime Minister resigns.

The Paris stock market plunged and France's borrowing costs soared on October 6th after Prime Minister Sébastien Lecornu announced his resignation less than a month in office, plunging the country deeper into political crisis.

An electronic display board shows the French CAC stock index at the Euronext stock exchange headquarters in La Defence, near Paris. Photo: AFP/VNA

The CAC 40 index of key stocks fell 1.7% at around 11 a.m. (local time), after at one point losing more than 2% immediately following the announcement. Shares of French banks such as BNP Paribas, Société Générale and Crédit Agricole all fell more than 4% in midday trading.

The yield on 10-year French government bonds, reflecting the country's borrowing costs, surged to 3.61% before easing slightly to 3.57%. Antoine Andreani, research director at trading platform XTB France, commented that if yields exceed 3.6%, French public debt could "become a target for large-scale speculation, further destabilizing the market."

The yield spread between French and German bonds, a key indicator of French credit risk relative to German credit, reached its highest level in nine months, at 89 basis points from 81 the previous day. Andreani added: “Lecornu’s resignation has plunged the political landscape into uncertainty. Investors fear a domino effect on economic and fiscal policy.”

Meanwhile, Jack Allen-Reynolds, Deputy Chief Economist for the Eurozone at Capital Economics, commented: “A divided Parliament makes it almost impossible to pass a budget to reduce the deficit. With government borrowing above 5% of Gross Domestic Product (GDP) and public debt rising, the risk premium on French bonds will continue to widen,” meaning the gap between French and German bond yields of the same maturity will increase.

On the same day, Germany stated that the resignation of French Prime Minister Sebastian Lecornu would not affect Europe's or Germany's capacity to act. German government spokesman Stefan Kornelius emphasized: "A stable France is also an important factor contributing to the stability of Europe," and affirmed that "there is no reason to doubt that France remains stable."

Meanwhile, far-right French presidential candidate Marine Le Pen called for early parliamentary elections, following Lecornu's resignation just hours after announcing his new cabinet. Le Pen, leader of the National Rally (RN) party, asserted: "Dissolving Parliament is absolutely necessary"; and argued that President Emmanuel Macron's resignation "would be a wise decision," despite the Élysée Palace occupant having previously rejected the possibility.

President Macron appointed Lecornu as Prime Minister last month, marking the shortest term in modern French history. The cabinet, which Macron announced on the evening of October 5th, remains largely unchanged and is headed by Prime Minister Lecornu, in an attempt to extricate the country from political deadlock, a move that has drawn fierce criticism from both the opposition and within the party.

Mr. Lecornu faced the difficult task of finding support in a deeply divided parliament for his proposed austerity budget for next year. His two most recent predecessors, François Bayrou and Michel Barnier, both left office amidst similar budgetary impasses.

Source: https://baotintuc.vn/thi-truong-tien-te/chung-khoan-phap-lao-doc-sau-khi-thu-tuong-tu-chuc-20251006202647960.htm