European stocks fall amid political uncertainty in France

European stocks were lower on Tuesday as investors in the region assessed political uncertainty in France following Sunday's election results.

 

The pan-European Stoxx 600 index was down 0.82 percent by 3:26 p.m. London time. Shares of oil and gas companies suffered the biggest losses, down 1.4 percent.

 

BP shares fell 3.93 percent after the oil company said in a trading statement that it expects second-quarter profit to fall by $1-2 billion due to asset impairments and by $500-700 million due to significantly lower refining margins.

 

Meanwhile, shares of Novo Nordisk, maker of the anti-fat drug Wegovy, fell 1.5% after a JAMA Internal Medicine analysis found that the company's rival drug Eli Lilly promotes greater weight loss.

 

The UK's FTSE 100 index also moved into negative territory in the afternoon after resisting a broader negative trend in the first half of the day. This followed last week's convincing election victory for the center-left party, which was seen as favorable for UK assets and sectors including homebuilders.

 

The CAC 40 index in Paris meanwhile fell 1.52% as traders continue to assess the implications of the lack of an absolute majority in parliament and a possible prolonged period of political uncertainty in France.

 

The left-wing New Popular Front won the most seats in the last round of voting, reversing an expected strengthening of the far right. However, the alliance failed to achieve an absolute majority, meaning the country will have a coalition or technocratic government, making it difficult to pass laws and reforms.

 

The credit market has brought French risk prices back to about half their pre-election levels, according to Bryn Jones, head of fixed income at Rathbones.

 

"It's a trade in anticipation and the market has already shown you that ... its spread is completely in the middle, from worse to better than it has been in recent weeks," Jones said.

 

Asia-Pacific markets mostly rose Tuesday.

 

U.S. stock futures were little changed Monday night after the S&P 500 and Nasdaq Composite closed at new record highs on Monday.