European stocks fall as traders digest French election results – NBC New York

• European stocks opened lower on Monday as markets reacted to expectations of a hung parliament in France.
• France’s CAC 40 index fell 0.4% and the euro fell 0.13% against the dollar.
• “Trying to form a government that has some form of stability looks like a very difficult goal this morning. Political paralysis over the next 12 months seems the most likely outcome,” Deutsche Bank strategists said.

LONDON — European stocks opened lower on Monday as markets reacted to expectations of a hung parliament in France following a surprise victory by a coalition of left-wing parties.

France’s CAC 40 index fell 0.4% and the euro fell 0.13% against the dollar.

Britain’s FTSE 100 index fell around 0.3%, while Germany’s DAX and FTSE MIB traded around the waterline. The pan-European STOXX 600 fell 0.1%.

France’s leftist New Popular Front won the largest number of seats in this weekend’s parliamentary election, thwarting an expected far-right gain. However, the coalition failed to secure an outright majority, early data showed, leaving markets to digest the possibility of a hung parliament.

Deutsche Bank strategists led by Jim Reid said tactical voting to block the far right had worked so well that it “swung the pendulum in the opposite direction, but without anyone having an overall majority.”

“The NPF has the most fiscally aggressive programme in terms of spending and taxes and the market will suspect that the prospect of them being in government now or later will bring with it higher deficits with associated concerns about debt sustainability and strained relations with Europe,” they wrote on Monday.

“The far left was already talking about wealth taxes and corporate tax increases last night, which would not be market-friendly. However, trying to form a government that has any kind of stability seems a very difficult goal this morning. Political paralysis for the next 12 months seems the most likely outcome.”

This comes after last week’s general election in Britain, in which the opposition Labour Party won a landslide victory, ousting the Conservatives after 14 years.

In corporate news, soft drinks maker Britvic has agreed a £3.3bn ($4.2bn) takeover bid from Carlsberg, with Britvic offering 1,290 pence per share. This was an improved offer from Carlsberg, which initially offered 1,200 pence per share, but was rejected.

There will be no major corporate earnings releases on Monday and no data releases either, with only German trade data due to be released.

In Asia-Pacific, stocks traded mixed on Monday. In the United States, futures were lower as investors awaited inflation data for clues on this year’s market recovery and the Federal Reserve’s next steps. The consumer price index for June is due on Thursday, and the producer price index on Friday.