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European stock markets posted gains on Monday, with the STOXX 50 rising 0.73%, the STOXX 600 up 0.32%, and the CAC 40 advancing around 1.09%. In addition, The Euro climbed above $1.074, hitting a high of $1.07754. Investors were digesting the results of France’s snap parliamentary election.
The far-right National Rally party won the first round, but with a lower share than some polls had predicted and far short of securing a majority. This outcome provided some relief to investors concerned about an expansionary fiscal agenda. However, the final results remain uncertain. While a National Rally majority is possible, it’s not the most likely scenario. Centrist and left-wing parties are in discussions to prevent a far-right majority in the second-round election next Sunday.
Banking shares were among the top performers, particularly French banks. BNP Paribas rose 3.6% and Societe Generale gained 3.1%.
In economic news, Germany’s inflation rate slowed more than expected in June, with CPI falling to 2.2%. The euro zone’s overall inflation, expected to be released Tuesday, is anticipated to show a similar slowdown to 2.5%. These figures strengthen the case for the ECB to consider further monetary easing in the coming months.
(STOXX 50 Index Six-month Chart)
(EURUSD Weekly Chart)
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